Gold Likely to Reignite Above $1294 Spot

Gold

Update 12:55- as expected momentum downward increased at our stop level from yesterday. Now to see how the market handles the $1275 area. For a best case bull scenario, we’d want to hold here a couple days to let some shorts in. Alternatively, a sharp quick break to the $1262 would also do the trick if it held fast of course. On the flip side, rallies should be sold under $1294 now, and a break of $1262 this time puts our long term position on the table for assessment. As of now, we intend to add physical physical between $1250 and $1265 if the market gets there. That will be assessed on the fly as we may prefer to buy on a penetration back up through $1262 if it pierced it again.

UPDATE 10:14

Any good level to be long ABOVE, is conversely a good level to be short below. We did not break $1294 and are now seeing the other side of the coin. The question now is, does Gold hold the $1283- 85 area or is the momentum going to reverse hard lower and re-test that $1262 level?

Failure or dip to buy? ...feels like a dip to buy in 2-3 days if stabilize and form a bull flag. Today we get acceleration likely below $1282 on the daily having already set off an hourly VBS lower just now. Immediate momentum is done higher unless a miracle happens.. Calling Kimmy and Trump to make idiocy in the sand box might work?

Lesson: if you are bullish above a level, then you are bearish below it. There is no HOLD. You are LONG or SHORT in trading.

- Soren K.

As we write this, Gold is experiencing what is for the moment a small healthy pullback from its Friday surge.

Bulls wishing to buy a pullback should consider areas above $1285 commensurate with their risk / reward parameters. Our preference in short term trading is to buy strength at the beginning of a rally. This caused us to miss an entry point as the market got away from us. Read Friday's Trade: Above $1285 'Take Gold Home for the Weekend' for blow by blow analysis. While we were right, we are not rich from that particular call.

But longer term traders should take note, this is frequently the first knee-jerk move of a healthy rally. It is just not our nature to buy pull backs for short term gains. We manage that by being long a core position in the macro based on last week's analysis entitled Why We're Buying Physical Gold with a $1700 Target - SKG

The immediate good news is, Gold may be reading itself for another lift off if we break and settle above $1294 on an hourly basis. Indeed if a signal is triggered we may well buy very small for a day trade based on our being denied entry on the first and usually most volatile part of a daily signal on Friday. But an hourly signal will be just the thing the doctor ordered to show the market is reinforcing its own direction.

Possible VBS Trade:

Buy on an hourly settle above $1294
Sell stop at $1292
Target 1.5 to 2x the amount risked at entry
Time-Out - liquidate if neither stopped out nor ITM in 3 bars (hours)

Here's some of today's possible market driving stories - Soren K.

German coalition talks break down, GOP leaders face tricky tax negotiations, and bitcoin passes $8,000.

Markets mixed

Overnight, the MSCI Asia Pacific Index slipped 0.1 percent while Japan’s Topix index closed 0.2 percent lower. Stocks in China saw a late-session rally erase much of the losses after the crackdown on shadow banking. In Europe, the Stoxx 600 Index was up 0.3 percent at 5:50 a.m. Eastern Time, with Germany’s DAX Index also turning higher as markets shrug off Merkel’s political difficulties. S&P 500 futures were 0.1 percent lower, the 10-year Treasury yield was at 2.342 percent, and gold was slightly lower.

Backroom deals

With the Senate tax bill due to be voted on as early as Nov. 30, private negotiations are in full swing to clinch the fiscal overhaul. GOP leaders are embarking on a tricky balancing act as they write a bill that seeks to pass the Senate’s strict budget rules while maintaining the 50 votes needed -- and, at the same time, leaving room for further compromise when the bill is reconciled with House legislation. President Donald Trump has expended much political capital in the fiscal effort but there’s a risk that any economic boost from the plan is offset by the Federal Reserve.

Walkout

Four-party talks on forging a new coalition government in Germany broke down Sunday after seemingly intractable policy disputes from migration to the environment spurred the liberal Free Democrats to walk out, scuppering Angela Merkel’s chances of an easy road to a fourth term as chancellor. While the euro weakened following the news, the currency recovered those losses in European trading. Fresh elections aren’t necessarily imminent with Merkel’s options including the formation of a minority government or a grand coalition with the main opposition Social Democrats.

A better bid?

The U.K. may be poised to increase its payment offer to the European Union for the so-called divorce bill that is a crucial part of the exit talks. Britain is “on the brink of making some serious movement forward,” Chancellor of the Exchequer Philip Hammond said ahead of today’s Brexit sub-committee meeting. While the government hems and haws, U.K. businesses are increasingly concerned over the slow pace of progress, while the budget on Wednesday is unlikely to give them cheer.

Markets mixed

$8,000

Bitcoin topped $8,000 for the first time as investors looked past technology concerns that saw it suffer a 29 percent plunge earlier this month. The cryptocurrency’s resilience to selloffs has some investors asking whether it can hit $10,000 by the end of the year. While the digital token is still seen by many as a bubble, one measure of volatility suggests it may have “solid economic fundamentals.”