CHARTWORKS - JUN 23, 2010
Gold – Support is Under Siege

Bob Hoye
Institutional Advisors
Posted Jun 25, 2010

We’ve been long term bulls and traded gold since the Winnipeg Exchange was the only North American market available for gold futures contracts and we hovered over the Dow Jones news wire waiting for the London P.M. fix each morning. This was before Americans were once again permitted to own gold; before Comex and the IMM fought for supremacy in the U.S. gold futures market during the second half of the 1970’s; and before the U.S. and IMF auctioned off 40 mln ounces (averaging less than $250 per ounce). Of the numerous breakouts in those four decades it is the expensive lessons learned following three failed breakouts that cause us to be vigilant whenever gold moves into new highs.

Monday’s test of $1230 support was important. Today’s low of $1225 has tested the rising support line and 20-day exponential moving average. If gold can ‘spring’ $1230 with a higher close it remains healthy. However, a clear violation of the support line, 20-day ema and Monday’s low ($1225, $1227 & $1230) would result in a drop to the $1160’s or lower.

As presented in the report of June 20th, a vertical run to the Fibonacci targets of $1300 and $1380 remains valid if prices can hold this level.

Our reasons for vigilance

(Click on image to enlarge)