On the heels of a second raid in the paper gold market with the dumping of yet another reckless $3 billion in paper gold, today King World News is pleased to present an important update on the war in the gold market from Michael Oliver at MSA. Oliver allowed KWN exclusively to share this key report with our global audience.
By Michael Oliver, MSA (Momentum Structural Analysis)
April 19 (King World News) – In our April 2nd report (and before) we argued that if gold could close a week over $1250 (later specified as above $1251.50), then we expected a renewed upside surge. Even in early April before that breakout gold had rallied from its late 2016 low by $130. Gold crossed that next threshold as of the weekly close of 4/7, closing that week above $1254. Gold has since moved to the mid $1290s. A secondary breakout and an efficient response…
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For now our best assessment of major support is down around $1250, though we have no conviction or reasons to assume that level will be visited. More likely near-term support is around the high $1270/ $1280 area.
We’re more focused on overhead levels of major consequence to annual momentum. We realize that many gold and gold miner longs are nervous, but ever since crossing annual momentum breakout numbers in February 2016, from annual momentum’s point of view, all has been within the context of a emergent bull market. Yes, sharp “corrections” that rattle teeth, but find a new bull or bear trend that doesn’t rattle the teeth of those on the (ultimately) right side.
Two Key Support Areas For Gold
So, for those looking for downside, we suggest probable support at $1280 or just below with more significant support at the $1250 area.
Meanwhile, as we’ve argued in recent reports, it’s time to focus on the Dollar Index as a wave generator for gold. The 99 level on that sleeping index is again under assault (the recent knee-jerk rally from the 99 area reached 101.50 and is now back down trading below 99.50 today). The Dollar Index keeps coming back down to our pre-defined critical level. Why can’t it just explode off it and wave goodbye?
Watch The U.S. Dollar Index Closely
While in 2016 the Dollar had no measurable beneficial impact on the substantial upturn in gold and silver, we now think the Dollar could come into play as a driving factor. And again the Dollar (for the third time this year) is dropping down towards MSA’s key number that we issued in late 2016. If the Dollar Index closes a month at or below 99 (or trades to 98 intra-month), then we argue for a major bear trend. So, to all you gold and GDX longs, we suggest paying equal attention to the Dollar Index rather than to daily stochastics (or whatever) on the GDX.
MSA could be wrong, of course—it happens—but our focus now, rather than on numbers below, is on nearby numbers above. If front month gold futures tag $1309 anytime this year, then annual momentum is back at last year’s oscillator high. And in a new annual bull trend (they tend to last three to five years), that’s usually a comforting sign—of a major momentum trend being happy. And if it trades to $1321, then annual momentum oscillator action will be above the peak oscillator reading of 2016 (rounded to the next percent on a 3-yr. avg. momentum chart). And that sort of action speaks to a happy trend indeed, despite all the angst it’s created getting there. The recent high was $1294.50.
Again, watch the Dollar Index (ignore the news, as it and market consequences are often the opposite of what most expect anyway) and watch those gold annual momentum happy numbers.
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