Gold moved in a narrow range between 1478 and 1462 yesterday, capped by the rapidly descending 20 DMA, as it was on Friday.  This morning, gold has jumped higher after falling steadily overnight to the 1460 area, though has again been capped at the 20 DMA.

It is clear that the 20 DMA is providing strong resistance and, as the moving average is falling rapidly, the price is being pushed down with it.  Gold needs to break last week's high at 1484 to resume the rally, though this is looking less likely as momentum wanes.

Oil has rebounded strongly after selling off hard last week, equities continue their inexorable rise towards all time highs and the dollar has fallen back from resistance at 83.  We maintain that further strength in equities will be bearish for gold, as would a move above 894 in the dollar.

Today's video for subscribers contains our thoughts on the recent rally and our strategy for our next trade.


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Gold moved in a volatile range on Friday, initially under pressure after making a high of 1484, falling as low as 1460 before moving higher on the release of much weaker than expected US GDP data in the afternoon.

Gold retested the 1480 area before selling off sharply into the close, as traders squared their positions and booked profits before the weekend.

This morning, gold is trading slightly higher and has recovered most of the ground lost late Friday. The market has fallen back into the uptrend channel, though is still moving higher and looks likely to retest the 20 DMA in the 1480 area.  A break through here will target stiff resistance around 1500, though a failure could set up a sharp sell off, as the market has risen rapidly off the 1322 lows without any sort of pullback.

Oil has likewise stalled at the 61.8% retracement of its recent sharp decline, though the strength in equities appears relentless.  The dollar has fallen sharply following the disappointing GDP data and is currently trading around 82.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold surged higher yesterday, breaking out above the top boundary of the uptrend channel and climbing as high as 1485 overnight.  Gold has since fallen back into the channel and is now trading over $20 off the overnight highs at 1464.

The market has reached the 61.8% retracement level that we identified as a probable resistance area and is now falling back.  We maintain that this rally is a correction to the huge falls last week and further declines are likely in coming weeks.

A move back above 1525 would change our view, though we would not change our stance to fully bullish unless or until we break 1800.  There are too many online commentators proclaiming the bull market alive and well, despite the huge technical damage done with the recent sell off - we cannot take such a view point with gold below 1525.

Yesterday, oil, silver and the industrial metals all surged powerfully higher along with equities, though oil has now also reached the 61.8% retracement of the recent decline and has found resistance there.

Further weakness in these assets, alongside a strengthening dollar, will suggest deflation, as commented in this blog in the early part of the week.  This danger has not gone away and until gold breaks 1525, oil breaks $98 and the industrial metals move out of their downtrends, the markets clearly see a heightened risk of deflation.

Today's video for subscribers looks at yesterday's trading in more detail and our strategy for our next trade.

After climbing steadily higher for most of yesterday's trading session, gold has continued to build on gains overnight, reaching a high of 1448 and the resistance area around the 50% Fibonacci retracement of the recent decline.

If gold can break through this resistance area, a move towards 1475, the 61.8% retracement level, becomes the most likely scenario.

The rally from last week's lows appears to be corrective in nature and we do not expect the price to move much higher than 1475 before selling pressure resumes.  We suspect the market has strongly moved to a "sell the rallies" mentality since the precipitous drop through key support at 1525.

Gold was bouyed by strength in oil and the industrial metals yesterday, though we are still bearish on commodities in general and gold whilst it remains below 1525.

The dollar looks poised to make an attempt at key resistance at 84, which if broken paves the way for a strong rally up to the 88 area.

The weekly jobless claims will be closely watched as usual and could move the market, with little other economic news on the data release slate today.

Today's video for subscribers looks at yesterday's trading action and our strategy for our next trade.

Gold drifted lower for most of the day yesterday, making a low of 1404 in the New York session before finding support and moving higher.  The price has climbed steadily overnight, in line with other commodities, and is currently trading around 1425.

It is interesting to note that gold is currently trading more like a commodity than a "safe haven" asset, moving up and down in line with oil, equities and the industrial meta.

We maintain that the rally from the lows last week at 1322 is corrective in nature rather than impulsive, so can be viewed as a "dead cat bounce" rather than a strong bullish recovery.

Only a break above 1525 will change our view - the technical damage done last week by the massive plunge on phenomenally high volume cannot be overemphasised.  For the bullish case to remain alive, the market needs to rapidly bounce back above 1525, thereby confirming the spike down as a final washout low before the next leg of the bull market begins.

Whilst many online commentators have taken this stance, the strength and structure of the rebound so far does not suggest to us that this is the correct view to take.

Today's video for subscribers looks at the trading of the past week and our targets for this corrective rally.

It is becoming increasingly clear to us that the current rally from last week's lows is corrective in nature - the slow, choppy, hesitant move upwards is not what one would expect from a final washout low in a bull market and a V shaped recovery.

We expect further declines once the massively oversold market conditions have been unwound, despite the plethora of online commentators proclaiming this to be, yet again, a "once in a lifetime" buying opportunity.

The massive volume on the sell off contrasts markedly with the hesitant and muted buying since, despite allegedly strong physical demand from China and India.

Everything that is unfolding right now is screaming DEFLATION to us - plunging precious metals, copper, oil and other commodities, equities forming a top and a resurgent dollar.  Although this seems counterintuitive, considering the massive stimulus programmes across the world and record low interest rates since 2008, that is what the markets are telling us.

If this is the case it is a very worrying development, as central banks have used all of their big guns and have nothing left - if the markets don't turn around, and fast, we could be looking at a liquidity crisis that will make 2008 look like a picnic.

However, we are traders and can make money whether markets are falling or rising, trending or rangebound.  Our overall strategic bias is now bearish, unless or until we break back above 1525.  A move above this level will see us turn "neutral" on gold and a break above 1800 would be strongly bullish.

Today's video for subscribers looks at the trading patterns since the sell off and our strategy for our next trade.

Gold thrust higher through resistance at 1404 early on Friday, moving as high as 1425 before falling back to retest the 1400 area.  This morning, gold has moved higher again and is currently trading around 1423.

The move higher feels corrective in nature to us, despite the reports of massive physical demand from India and China which is underpinning the market.

The dollar is gaining some upside momentum once more, equities have bounced back a little from their recent sell off and oil is holding above $88 a barrel.  However, the likelihood of a sharp sell off in equities remains and all commodities have been under pressure recently.

As we mentioned last week, any further significant falls will suggest deflation, a surprising and worrisome prospect considering the measures the central banks of the world have gone to avoid such an outcome.  Will this result in even greater liquidity injections and even more radical economic stimulus measures?  Can anything the central banks do actually work or are we headed for a worldwide period of deflation, as experienced by Japan for the past two decades?

Today's video looks at our targets for this corrective gold rally and our strategy for our next trade.

Gold moved steadily higher all day yesterday, finding resistance at 1400 too difficult to break, however persistent buying overnight has kept the upward pressure going and gold finally broke through Tuesday's high at 1404 early this morning, surging as high as 1425 once this resistance area was broken.

The break of 1404 suggests gold is correcting in an ABC pattern, though the strength of the recovery from Monday's monumental sell off is not particularly inspiring for the bulls and we still expect lower prices in the coming weeks.

Gold may move as high as 1450-1475 duing this correction, though we do not expect the price to move any higher than this - if it does, a retest of 1525 is likely.  Following the correction, we expect the price to sell off hard again, retesting 1320 and possibly dropping towards 1200 before this liquidation sel off is completed.

Oil has recovered well from lows around $86 and has recaptured the crucial $88 level - further oil strength could help lift gold higher, though weakness in oil and equities would suggest more downside for all assets and a deflationary environment.

Today's video looks at yesterday's trading in more detail and our strategy for our next trade.

In another relatively quiet day of trading yesterday, gold moved in a $30 range, making a low of 1365 and a high of 1395.  Gold has so far failed to move substantially higher following the massive plunge on Friday and Monday - if this were a temporary interruption to the bull trend, we would have expected gold to rebound strongly in a V shaped bounce.

Gold fell sharply overnight, though bounced off 1337 and had since recovered strongly to currently trade around 1387.

It appears that gold is tracing out a triangle consolidation near the lows - if this is the case, then the most likely scenario is for further declines, as the odds favour a downside break of the triangle.  A break above 1404 will negate this pattern and suggest more upside and a test of 1450 is more likely.

The recent weakness in oil and equities, as well as other commodities and precious metals is signalling a deflationary environment ahead.  This is incredible, considering the huge amounts of economic stimulus pumped into the economy and the historically low interest environment we have been in for the past 4 years.

The suggestion that Europe and the US will follow Japan into a multi-decade deflationary stagnation, after all the efforts to avoid such a scenario, is extremely worrying.

Today's video to subscribers looks at yesterday's trading in detail and

Relative calm returned to the gold market yesterday, though an $82 range for the day would, under normal circumstances, be an exceptionally volatile day.

Gold recovered from the 1320 overnight lows to make a high of 1404 in the afternoon, though could not build on the gains and fell back to trade in a narrow range between 1360 and 1380 for the rest of the day.

This morning, the quiet trading has continued - the lack of follow through buying will be concerning for the bulls considering the historically oversold condition of the market and the $200 drop in price in just 3 days.

Oil is attempting to stabilise above key support at $88 a barrel after falling as far as $86 on Monday and the dollar is also stabilising around 82.  However, we have noted for some months now that the usual correlation between gold and the dollar has been absent.

With equities under pressure again after the big falls on Monday, we are still on alert for a "liquidation" event similar to 2008, where all asset classes sold off dramatically apart from the dollar.  This would clearly indicate deflation is on the way, the worst nightmare for central banks and a scenario they have been pulling out all the stops to avoid for the past 4 years.

Today's video for subscribers looks at yesterday's trading in more detail and our strategy for our next trade.