With stocks plummeting around the world, it’s clear that gold has miserably flunked the safe-haven test. Virtually no one would have predicted that bullion prices would barely budge if the Dow Industrials were to fall more than 2100 points in just three days. And yet, that’s exactly what happened. Why? Forced liquidations and falling oil prices were obviously weighing on the precious metals sector. But it’s also possible that despite the ferocity of the selling, the institutional heavyweights who control the markets were confident that everything would turn out all right. If so, not only did they feel little fear as shares fell, they may also have been relieved to see some hot  air come out of a potential bubble. While we winced as trillions of dollars of market valuation vanished in a blink, they saw opportunities for bargain hunting as stocks came to fully discount a rotten Q3.

Whatever the case, the best way to look at gold’s charts at the moment is to pretend we know nothing about the stock market’s troubles. Seen from that perspective, December Gold appears to be consolidating for a push above 1200 in the weeks ahead. Notice that although the futures gave back most of yesterday’s modest rally by day’s end, the intraday high poked slightly above an ‘external’ peak at 1169.00 recorded back in early July. This generated a bullish impulse leg on the daily chart, implying that the pullback from Monday’s high is likely to produce a follow-through rally. Were it to equal the rally from mid-August’s 1108.50 low, the futures could trade as high as 1206.00 by month’s end or early September. _______ UPDATE (August 26, 12:45 a.m. EDT): The hourly chart shows the futures bound for a clear Hidden Pivot at 1127.20.  If this minor support fails, gold is likely to sink into the range 1115-1120, groping for support within a consolidation zone created in mid-August. _______ UPDATE (9:36 a.m. EDT): Gold got whacked again last night, lending clarity to a pattern that projects to a maximum 1110.20 short-term (60-minute, A=1169.80 on 8/24). The bullish alternative would be if it can turn from 1119.10, the p2 pivot. That wouldn’t be bullish per se, but an unpaused follow-through hitting 1152.60 most surely would be.