Loading ...$ GCG15 – February Gold (Last:1193.50)
January 5, 2015 12:30 a.m. EST
There have been five rally attempts since gold made what looked like a promising low in early November, but none has been anything to write home about. The term ’sucker-bait’ comes to mind, or perhaps ‘bull traps’, mainly because each of the rallies has come off a low that occurred just beneath some prior low. This implies that more than a few bulls would have gotten stopped out near the respective lows, lightening the selling load ahead of the next rally. Under the circumstances, it’s somewhat surprising that the rallies have been so fleeting and feeble.
This is not the behavior of a commodity that wants to go higher, and so you should exercise particular caution if you incline toward trading gold only from the long side. If and when it heads lower, which is what I expect, look for the February contract to fall to at least 1114.80 in search of traction. (My long-term target is still $810, by the way.) This Hidden Pivot support was first broached here nearly two weeks ago with gold trading around these levels.
As I mentioned last week, I’d happily change my mind and wax as bullish as the next guy, if not quite bullish as all get-out, if and when the February futures hit 1256.30. That would generate a robust impulse leg on the daily chart for the first time since August 2013. However, you should keep mind that that rally, promising as it seemed at the time, proved to be…sucker-bait. Meanwhile, and most immediately, the futures appeared to be consolidating Sunday night at an 1190.80 midpoint pivot for a further push to 1203.80, its ‘D’ sibling. They’ll need to exceed it, though, to imply that buyers are not fixing to roll over yet again.