Eric King:  “Tom, can you talk about what your bullish view on oil will mean for gold?”

Fitzpatrick:  “When you look at oil, Eric, as you well know it’s something that is the main part of the commodity complex.  So if we do see a push higher developing in oil, which we suspect there will be, and we’re particularly looking at WTI (West Texas Intermediate) which is outperforming Brent at the moment, then there is going to be a feedback loop in terms of seeing that filter into other commodities....

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“If WTI can get up through resistance in the $97 to $99 area, we expect to see oil push all the way back to the highs which were in the $112 to $113 zone.  It would be hard to see oil surge like that and not expect you are going to see a positive feedback loop into some of the other commodities, including gold and silver (see chart below).

We still need a bit more of a buildup in gold.  We did get a bullish outside day in gold yesterday, but one day does not make a trend in these markets.  So I think we need to see more upside in gold, where we see gold get at least punch through the interim resistance areas that it has tested the last few days which are coming in just above the $1,250 level.

If gold can clear that resistance zone, that could then well open up the way for gold to push back up toward the recent high of $1,362, and, ultimately, we think, to test the highs that were posted in August of around $1,434.

The other thing I would say is there are some slight warning signs developing in equity markets.  And we’ve always said that when we see the equity markets run out of steam, using the 1970s as a comparison in terms of when the next big up-move in gold took place, gold really began to gain momentum as the equity markets began to lose momentum.

There are now some warning indicators suggesting that the equity markets are in fact losing a little bit of steam.  So if you combine our bullish view on oil, with a little bit of steam being lost in the equity markets, this would seem to suggest a very constructive picture for gold as we move into the end of this year and into 2014.”

King World News note:  If oil does take off to the upside, this will be extremely constructive for the gold and silver markets.  Investors should watch for a break above the key levels shown by Fitzpatrick.  In the meantime, Friday’s US jobs report has traders waiting for the gold and silver markets next move in the short-term.

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