With all the attention on the crytocurrencies, the other important asset class has creeped up unnoticed. Good old gold has not lost its luster! 1200 is the vital support for gold, which is plain obvious on the charts. Seeing how the prices trade around that level gives important information of the intent behind the big holders of gold.
During the US election, the market flushed prices below 1200. Notice the v shape recovery back up above 1200. This indicates stop running and short coverings took place within the 1125-1200 region. The big holders want in on gold! The two black circles tested if the market was willing to accept $1200 as support. Notice how the first circle dipped a little below but buying quickly pushed prices back up. That's buying on dips.
The second circle retested 1200 successfully over a period of 5 days with little signs of selling below that price. This is confirmation that 1200 will be here to stay. On the third circle, prices did not even come close to 1200. Classic higher lows, Dow Theory. Classic uptrend signs.
The commitment of traders (COT) report also indicate the commercials reducing as much as 20% short positions on Gold within the last month. This is huge, considering commercials are holding historical high volume shorts on this asset. This flipping will lighten the downside pressure and provide fuel for the current leg up.
Conclusion? 1290 is in sight. Once it breaks, we should see 1360 quickly followed by the upmove to 1500.
