Gold Trying to Hang Tough

By Peter Aan.

Gold is hanging tough this morning, near Friday’s close, while the other metals are succumbing to selling pressure. Here’s what I see now:

Gold has been quiet so far today, little changed from Friday’s close. Although we penetrated 1100.00 (December contract) on Friday, we did not close below that level. I continue to believe that a close below 1100.0 will pave the way for a trip down to the July-August lows at the 1073.70 to 1079.20 area. Lower prices expected.

We penetrated that 14.425 area (December) on Friday that I discussed, although buying entered and gave us a close a few cents above it. We are seeing selling pressure re-enter this morning, so we might see such a close today, which would clear the way for movement towards the August low of 13.950.

Friday’s close was below the support level that I discussed, and we are seeing the bears again today. I see this market moving down to the July-August double bottom formed around 945.40 (October). If we are able to penetrate that, there is no support on the charts to prevent a long-term move to the 2008 low of 761.80. This is not a prediction that it will go that level, but just an observation that there is plenty of white space on the chart below 945.40.

Palladium worked higher on Friday, but remained in the recent, tight trading range. Last night it flirted with the upper boundary of that range before pulling back. A penetration of 600.00 – 605.00 (December) would signal an upside breakout, but a close below 569.00 on the downside would be bearish.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.