Gold Daily April 8, 2014 |
| Posted: 08 Apr 2014 12:59 AM PDT  Long Term ~ Neutral - Need a monthly close above 1800 to confirm the bull market final phase underway. Medium Term ~ Neutral – Trend is now neutral after one year in bearish mode. A close above 1420-1480 needed for next significant price point--but a March close above 1322 GETS ONE MORE NOTCH to bullish. Intermediate Term ~ Neutral– A close above 1355 needed for more bullish action. We are at the end of the short term cycle window. A close below 1262-1272 puts us bearish. Short Term ~ Neutral – the short term cycle resolved to the upside and only a close below 1272-1282 would favor it to be a down one. Initial Resistance 1307-1313 2nd tier 1320-1324 Initial Support 1286-1296 and 2nd tier 1272-1280 Resistance was listed at 1305-1315 on the last update and the high was 1305. Support was listed at 1282-1289 and the low was 1296. We're arriving at the mid-term election point in USA and that is why the FED is TAPERING and trying to gently suggest higher rates down the pike. In other words, the next 9 months is the only TIME WINDOW left to tighten things up, and to have the stock market pull back in a correction. This is when it will be politically acceptable. Thus the Fed knows it either tightens here or it will have to wait until after the elections. That's too long so they are trying to do some of it. Yellen already had to pull back and had basically a conference announcing that they would only continue if it doesn't wreck the economy. The irony is that the economy is already wrecked. Regardless, this is their time window. Look at the TNX chart (interest rates) on the weekly UPDATE under the bond section. We're ready to either break above the long term channel or break below the moving averages. If we move below the moving averages, then rates will trend lower on an intermediate term downtrend. If we breakout above the channel we are at, then the odds will continue to favor a higher interest rate cycle into early next year. Then they would begin to loosen in order to have things hunky dory for the next election cycle. The long term chart below shows that the interest rate cycle from the last bull market went from 1965 to 1981 with only TWO rate corrections lower. The first on in 970 began about 6 months before we went off the gold standard, and the 2nd in 1975 and 1976 was where GOLD lost 50% of its value --- from 200 to 100 dollars as interest rates dropped. The final arrow was where gold peaked in 1980. While it was almost a year from the peak in time it was not far from the peak in rates. There was one final VOLKER panic increase when he took the prime rate to 21% in order to halt the inflationary cycle and it worked.  This current cycle has a much deeper problem. Most people are living on wages akin to 1970 and thus the problem is not getting people to stop spending, but to get them to SPEND. But their debt level and low wage only allows them to buy food, clothing and shelter. THE NON DESCETIONAY part of the paycheck to spend on other things that are not ESSENTIAL is gone for MOST. It has already been spent on the essentials and an economy that can only spend on essentials can't grow GDP at the rate it is needed. Thus the real problem, as far fetched as you might think remains the potential for a place like China to unwind. The one thing to remain focused on is the minutes coming out of the last Fed FOMC this Wednesday at 2pm. Perhaps this is why gold is hesitating a bit here on the short term? Gold hourly chart Resistance this week is 1315-1322 and 1333-1343. On monthly resistance watch the 1328-1333 area and use as a pivot. Below 1328 and we are in Feb price territory. Above 1333, we are in March Territory. The short term trend is neutral, and does still favor higher this week but A CLOSE BELOW 1272 and forget it. Support is the gold trend line but if broken then 1266-1272. THE KEY for Tuesday is whether gold can get above 1305-1310. If so then that blue uptrend line and the gold Fibonacci retrace line point to 1316-1322 as still the odds favored resistance point. On the downside, support is the 1292-1294 area where the green 200 hour moving average resides. WE NEED TO SEE THE MINI BLUE MOVING AVERAGE (89 HOUR) GET ABOVE THE GREEN 200 HOUR FOR ADDITIONAL UPSIDE POTENTIAL. In summary, the short term trend is still intact, but let's be careful because the pattern has more choppy and overlapping waves since the low than I like to see.  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