Up until now I was convinced gold would plunge all the way to $1050. But some stats and indicators are coming up to make me question that premise. Let’s start with the American dollar: The chart below is strongly suggesting a failed rally much earlier than normal. A failed dollar rally is good for gold.
Add to this clue the following:
1. Gold is in the perfect spot time wise for a multi-month rally while the $ is getting close to the timing band for a multi month fall.
2. There was a very big “buying on weakness” number in GLD the other day. Major players are coming in to the gold ETF.
3. The other night there was another take down in the overnight gold market, but for the first time it was overwhelmed by buyers. This resulted in a short cover rally that created a large outside reversal bar off a low of $1227.
4. The commitment of traders (COT) numbers show short sellers are all in. This is a great reversal signal.
5. Sentiment indicators for gold are at extremes which, in the past, have preceded major reversals.
6. Insider trading, as evidenced by the Direxion NUGT fund has exploded in the last few months.
It is too early to tell, but I have been suspicious lately about the fact that so many of us, me included, have been so confident gold will go to $1050, that just perhaps it will not!