A Market Timing Report based on the 11-01-2013 Close published Sunday November 1st, 2013
GLD (now @ 126.95) made it through all three resistance lines last week and then reversed back BELOW all three. The breakout was a fake-out or false breakout. The close on Monday was at 130.56, which was a bit too cute, being just 0.05 points above the breakout. Here’s the chart:
I expect GLD to test 125.15 and then if that does not hold, the recent low on the daily chart.
The gold weakness followed the Fed statement. The market believes that the economy is recovering, so that less in the way of QE will be required going forward. That means higher interest rates with the Fed stepping out of the picture.
The thing that could help boost gold (GLD) and silver (SLV)is the impression that the Fed WILL NOT be able to step out of the way without having interest rates go to prohibitive levels that would shut down the economy. The other is rising inflation which is not in the picture at the moment. Inflation won’t be a problem until the economy starts growing too quickly with rates still very low.
Gold will do the best if it stays above the next support level, which would define a higher low. Otherwise the momentum it had will have been lost.
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