Today was a huge day for gold and the GLD ETF in my opinion! Gold got a nice bid today and held firm. I consider it to be a possibly pivotal day for the gold market for two reasons.
The first reason is that despite the broad market break down today, the gold price (as represented by the GLD ETF) held firm all day and managed to trade up by about .60%. I hinted about this when it happened a few days ago and could be the early signs that foretell a scenario where the gold price becomes less “co dependent” on the broad market for its direction.
The second big reason I consider today to be a pivotal day for the gold price is because gold was able to trade up today despite the significant US dollar strength we saw throughout the day today. So we had the broad market down big, the US Dollar UP big and the gold price holding firm and managing to get a nice upside close.
This is a positive sign for gold now that it is so crammed inside this quite large symmetrical triangle formation. If we can keep the current trend of gold price relative strength to stronger dollar and weaker stock market, then it could be IDEAL conditions for a super spike 30 year massive upside breakout in the gold price.
Despite my excitement, it is still too early to make the conclusive call which direction we break out of. However I am going to be looking very carefully the next few days to see if we can manage an upside signal. I will be watching the DGP very closely for the rest of this week.
We have positive September seasonals, the now positive relative strength of gold versus paper. I really think we have a decent chance at achieving this breakout this month! But I would like to see each day of September work towards that conclusion. If we get a hard down reversal tomorrow then it will start to build doubt again.
Remember, there are likely thousands if not millions of buy stop orders near the 1000 level in the gold price and the 100 level on the GLD. If the price can manage to jump into those levels we could see an unbelievable surge in buy orders triggered that could launch the price north like a rocket ship. In fact the demand may be so large that I would not be surprised to see a quite large run away gap develop that really surprises most people. This run away gap situation is my wild speculation at this point, but I have to consider all possibilities.
Perhaps I am being a bit too overconfident from just one day’s action, but I just get this sense that something big is going to come over the mountain, I think we are close.