Since Gold bottomed out 2 weeks ago and my correction buy target zone between my 2 targets of $1170 and $1140, it has gone on a steady rise to $1200, and today it broke through that barrier and all the way to the 50MA at $1200. With the way gold is trading today on Friday and only selling off slightly late day, it will break the 50MA next and start moving up to test the highs set earlier this year. Gold needed the currency hedge to unwind and now that it has and that fear trade has gone, gold can resume its cyclical bull trend.
Despite poor employment numbers both in Canada and he US and further revisions downward of last months numbers on a Friday; one thing that gives me confidence that such a move will continue even before it has broken the last area of resistance, is that on such a day the majors are giving POG positive affirmation by all being up significantly against the rest of the market. On a Friday, when everyone else is selling, investors are piling into Gold before the weekend!
Gold may test support of $1200 and a little under next week or it may not depending on market conditions Monday, but one thing for sure is that it is going to break the 50MA with authority sometime next week. Once POG is over $1200 again, investors will realize that Gold is the place to be.
With investor uncertainty in the markets, and most risk currencies set to retrace as well as a strong buying season for gold all combine to go up and break out to all time highs again in late summer early fall. One thing is certain, no matter the short term risk of deflation which I still don't believe, there will always be a long term hyperinflation environment which will drive gold higher over the long run.
Happy Trading
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