I Will Stay Bullish On Spot Gold as Long as the Break Out Area Holds

spotgold20090921 The GLD ETF declined today on what I consider to be light volume.  I think it is going to go into a sideways consolidation this week with an outside chance of a sharp reversal move up topside later in the week.  The setup still looks contructive to me on both the GLD ETF and the spot gold price.

In the chart above as long as the spot gold price holds above the 988 level which is approximately where the long blue key support line is, then I will remain BULLISH on gold for the rest of September and the last 3 months of this year.  Spot gold already did the job of breaking above this line on big volume, but not blockbuster volume.  We could pull back all the way to 990 and I would still be bullish. 

It is possible that we could enter a sideways trading range for some time but we do still have the very bullish seasonals until the end of this week and at various other time frames into the end of this year.

Why be bearish on spot gold if the chart is not telling you to?  The charts do not lie and I am not going to doubt this spot gold price chart.  Obey and stay above the breakout area, then I am happy to be a gold bull.  Break under it, then something else is going on and the bull case is delayed.

Clean. Simple. Effective.

The US dollar tried to get a big rally going today but failed intra day and closed near the low as least as represented by the UUP ETF.  I continue to believe that the trend in the US Dollar Index remains near term bearish despite the extraordinary contrarian sentiment readings now.

I think gold is still struggling somewhat right now in getting a really BIG move higher because it is still in competition with the love affair for paper stocks and the broad market.  It could very well be that the gold market is waiting for the inevitable turn to come into the broad market as a reason to move higher.  Just a theory.

So to sum up, I am still an adamant gold bull as long as our breakout area holds!

Posted in Commodity ETF, Gold Market, Market Timing
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