Gold and silver had an early pop into tougher resistance, but then got hit hard later on in the morning almost to unchanged, and then managed to recover a little into the close. An intraday chart showing the sharp early morning rally is shown below.
I had expected a much stiffer gut check on the longs, and we may still get it. I do not expect any breakout through resistance here to be easy.
But if we get the breakout and stick it, and the bears panic, look for a swift run to the next line of defense where the big shorts will once again attempt to make a stand.
Looking at the chart it seems pretty straightforward. There have been three major attempts to break through it, with this being the most recent, after the big blow off top.
I think this resistance will be broken, but I cannot say if it is this time or not. This is why I am holding off on drawing a broader trend curve to the gold chart in particular. Coming off the long basing we saw at support surely helps on this attempt. If it is enough, who can say except in retrospect?
Someone seems very keen on stopping out any rallies below 1800, and the markets being what they are, with little regard to position limits and the integrity of the play, it could be quite a challenge at each major step of the way higher.
Here are a few events this week that may affect the markets.
On Wednesday we will get the US Non-Manufacturing ISM number, and the ADP employment report.
On Thursday the Banks of England and the ECB may have something to say about interest rates, and very early on Friday there will be the release of Eurozone GDP.
The event of the week may be the Non-Farm Payrolls Report on Friday before the stock market open in NY.
The action in the metals markets will probably be more of a war of attrition than a blitzkrieg. But I have an abiding feeling that at some point the status quo will break down, and that may be, as the kids say, epic.
Have a pleasant evening.
