Gold

DaBoyz were taking as much air out of Comex futures as possible Thursday night, the better to steal paper gold from widows and pensioners who may have come away from yesterday's monster rally eager to unload an asset that has underperformed for all too long. Could they be wrong?  From a technical standpoint, the August contract tripped a buy signal for a shot at 1445.00, a Hidden Pivot target. We can all afford to be a little skeptical about this, but even for skeptics there will be good reason to loosen up and go with the flow above 1342.60, an important 'hidden' resistance whose breach would reaffirm the very bullish price action we saw yesterday.  That's just $20 above the intraday high, and if it's exceeded as early as today, that would attest not only to the power of the rally, but to its potential staying power.

Geopolitical tension, of all things, has reversed a downtrend that threatened to bring August Gold down to 1221. Now, you can see a larger, bullish pattern that I once favored, being bent back into serviceability by the rally that has unfolded over the last two weeks. It would trip a 'buy' signal of major degree at 1291.40, but I wouldn't break out the bubbly until such time as the 1342.60 'midpoint Hidden Pivot' has been exceeded by at least a few dollars.  That would put a 1445.00 target well in play -- the most optimistic number I've been able to broach here in a long while.

August Gold's daily chart is in a very clear downtrend that projects to 1221.20 (see inset). What gives the bearish pattern its authority and presumed precise reliability is the 'legitimacy' of the 1240.20 'B' low on 6/3. It lies three ticks beneath a key external low recorded on January 31, and is therefore not 'sausage'. The tradable implication is that you can bottom-fish the 1253.10 midpoint support with a very tight (i.e., perhaps four- or five-tick) stop-loss. However, if it's hit, a further fall to the 1221.20 target should be regarded as likely.  Please note that the foregoing would be invalidated if the futures can rally above 1285.10, the point C of the pattern.

Gold is getting whacked Monday night, presumably because the fever of war in Iraq has cooled somewhat. As we might have predicted, crude oil quotes have eased only slightly. Most likely, this is because energy traders are not so stupid as to breathe an ostentatious sigh of relief merely because Baghdad has not yet erupted in flames. Perhaps this won't happen; instead, the 5000 ISIS radicals will get slaughtered by Shiite militiamen, to the unexpected delight of the geopolitical word. That would play particularly well in America, where tragedies with happy endings have become a staple of Hollywood. On Wall Street, however, it is the stuff of which short-squeeze rallies are made. But clearly not in bullion. The chart shows where August Gold's troubles began: a tad shy of a Hidden Pivot target at 1287.40. Targets that clear and compelling should not just be reached, but exceeded, if bulls are about to romp. In fact, shortly before midnight the opposite was about to occur -- with a retracement that looked likely to exceed its target, 1265.80. The so-far low is three ticks above it, at 1266.10 -- a good place to have tried bottom-fishing with a 'camouflage' entry on  the lesser charts. But if the 'hidden support' gives way, look for more selling down to 1260 or so, where bulls consolidated last week for a three-day rally that now looks to have been gratuitous.

The futures popped through the 1277.90 midpoint resistance shown Sunday evening, implying there's enough juice to carry them to the pivot's D-target sibling at 1284.90.  As always, an easy move through that Hidden Pivot would imply that more upside awaits.  Notice that there's a slightly higher B-C pairing that could alter the outlook. The target thereof is 1287.40.

For reasons that I will explain soon, I've just turned even more bullish on crude than the $119 target I've been using would imply. My reason has especially bullish implications for gold, implying that the rally begun with last Thursday's spike may be just a booster thrust. Gold's chart at the moment is much too placid, considering the news that is about to send it higher. In any event, the nearest Hidden Pivot target lies at 1269.30 (see inset) and even though the futures pussyfooted embarrassingly yesterday, they should make short work of the target if they catch a whiff of the same scent from Mosul  that I've caught.

On the hourly chart, August Gold has generated the second bullish impulse leg in four days.  Considering the long dirge that has preceded this encouraging effusion, the rally qualifies as news. We'll be better able to judge whether it's about to get legs once we've seen how buyers handle the 1263.60 midpoint resistance shown, and thence its 'D'-target sibling at 1269.30.  As always, an easy move through either of these Hidden Pivots would be telegraphing still higher prices to come

Having broken a pennant support that traces back to February, August Gold now appears bound for a minimum 1216.60, based on the Hidden Pivot pattern shown. This would be a downpayment on an 1141.00 target that I'd said last week was in play. Because it comes from a continuous chart, that number may not work out precisely, However, it is nonetheless a technically viable price objective, even if 1216.60 should still be regarded as a good place to attempt tightly stopped bottom-fishing. _______ UPDATE (June 3, 1:56 a.m. ET): A drop to 1216.60 in the week ahead still looks no worse than an even bet, but if the flow is up today we should try to take advantage of it.  Notice in the 5-minute chart shown that there are a couple of small peaks recorded on the way down yesterday. Each can be used to get long on a small pullback from just above, much in the way shown in the chart accompanying today's Silver tout. _______ UPDATE (June 4, 1:14 a.m. ET):  Feeble buying yesterday -- but so was the selling. No change in my outlook: lower prices are likely. _______ UPDATE (June 5, 11:57 p.m.):  This rally could hit 1264.60, or 1266.40 if any higher over the near term, but first the futures must take out the midpoints pivots associated with those targets. They lie, respectively, at 1257.40 and 1258.30. Any easy move through them would be an encouraging sign. _______ UPDATE (June 10, 11:03 p.m.): A shaky rally is targeted on a minor Hidden Pivot at 1262.70, but the futures will first have to break decisively above its sibling midpoint resistance at 1254.20.

The low and high of the pennant formation shown will come in today near, respectively, 1281.00 and 1307.00, and a rally to the higher number would be more bullish than a fall to the lower would be bearish.  Accordingly, you should view any b-c pullback from just above 1307.00 as a speculative buying opportunity. It would be best leveraged by using an uptrending abc pattern on the very less charts for an entry signal.  Anything between the two lines should be regarded as mere noise, tradable only by the very nimblest scalpers.  _______ UPDATE (11:07 a.m ET):  Gold is falling as usual, presumably headed for the 1252.80 target of (60m) A=1331.40 on 4/14/; B=1268.40 on 4/24). The target will be worth bottom-fishing, but you should trade with a bearish bias until it's reached. (Note: Basis the August contract, the target is 1253.00.)