Hourly Action In Gold From Trader Dan

Posted at 1:57 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Gold put in a decent performance today which coming on a Friday with a jobs report being released is actually encouraging. Over the years we have seen so many of these payroll report days in which gold gets pummeled for no other reason than the bullion banks decide to beat up on the metal. That strength, even in the face of very obvious orchestrated selling such as today’s, is impressive.

Gold rallied just shy of yesterday’s session high before the attack began which further illustrates my recent point that the gold selling Banshees at the Comex are furiously attempting to prevent this week’s high from being taken out since that will trigger a tremendous amount of new buying which will take price up to the last level of resistance just above $1,150 that stands between gold and a retest of $1,200.

Yesterday’s open interest increase of some 7,200 contracts indicates that dip buyers were active, a good sign as the OI is pushing close to 500,000 once again. That is exactly what gold needs to push through the overhead resistance presented by the bullion banks – new spec interest in the long side. Interestingly enough both the most active April as well as the June saw fresh buying coming in. Generally this close to the roll one sees speculative money move into the next month.

Once again, both Euro gold and British Pound priced gold made new lifetime highs at the PM Fix today with €836.527 and £755.307 respectively being the fixes. A bit later in today’s session, both the Euro and Pound bounced off their lows once again. Both trades are quite lopsidedly short so some of the bears are no doubt ringing the cash register.

The Dollar while weaker just will not break down technically but looks to be grinding sideways with bears unable to press it down through important chart levels while bulls do not seem to be able to muster enough momentum to take it up through 81. For the very short term, they appear to both be stalemated.

The jobs number came out this morning and had Wall Street giddy with excitement that “only” 36,000 jobs were lost. What do we get as comments: “that is a fairly strong employment report.” Let’s see, that means the last 25 out of 26 months this nation has been shedding jobs and folks are excited about that? Are they out of their damn minds?

Tell that to the folks who are out of work and unable to find a decent waged position. By the way, the U6 number, which includes discouraged workers and those working part time who want to work full time but have been unable to do so rose to 16.8% from 16.5% the previous month. Obviously, the spinmeisters did not want to touch that one with a ten foot pole.

I do not know exactly what the public relations blitz that the Caesar’s were putting out while Rome was disintegrating around them but something tells me that it was probably not all that different than what this current crop of market analysts and financial TV talking heads are serving up for public consumption. How much more of this, “It’s not as bad as we were fearing therefore it is great” BS do we have to endure from these hucksters? Well, one thing is for sure, this so-called, “JOBLESS” recovery is certainly living up to its name.

The way I look at it that is another 36,000 folks who will not be buying LCD TVs, autos, boats or even furniture and other major appliances.

Oh, and by the way, temporary hiring of those workers to conduct the US Census added 15,000 workers in further proof that the only thing growing in this economy is the size of the federal government. Yes siree Bob – now that’s a long term career move. You get to annoy and generally pester US citizens with all manners of irrelevant and unconstitutional questions such as “how much money do you make?” or “what color is your underwear?” and the Feds pay your salary with the tax dollars of these same people that you get to harass. Is this a great country or what?

Back to gold – the ability of gold to generate buying ABOVE the $1,130 level is a technical plus. It is also trading above all the major moving averages which plants the market firmly on a bullish footing. The RSI has not yet punched through the resistance level shown on the price chart which is about the only fly in the ointment that I can see right now as the mining shares are also putting in a good performance.

The HUI is strong today but thus far has not bettered this week’s high made on Wednesday up at 433. It will need to take that out to mount a push up towards 449 – 451. Support is between 410 – 405 should 420 – 419 fail to attract sufficient buyers on any setback in price.

The S&P 500 finally overcame that pesky overhead selling resistance near 1125 and is solidly higher here at midday. That is also helping the mining shares as today more of those hedge fund ratio spreads against the miners are being unwound with the metal selling more selling that the mining equities.

Something to keep an eye on is the crude oil market. It is up today reaching $82 at one point. Crude has been trapped in a very broad price range since late last year with the peak of that range up near $84. Technically, the chart looks strong and if bulls can put in a strong finish to this week, they have a good shot at attempting to reach the upside early next week. Crude oil prices that begin trending (they need to push solidly above 84 on good volume) will also help to shore up the gold market as it will indicate that deflation fears are fading in favor of inflationary ones. Stay tuned because the jury is still not out on this however.

Bonds were whacked hard today on the “happy” jobs number. They too are going no where fast and remain mired in a trading range with neither side being able to gain a definitive advantage.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini