XMFSinchiruna (28.61)

The Changing Tide

June 07, 2010 – Comments (4)

You can sense it in the gold coverage from the talking heads.

This guy Brimelow has spewed enough useless garbage about gold over the years to wallpaper his entire underground lair. But here he is quoting the likes of Trader Dan Norcini and Bill Murphy without so much as a single defamatory remark about the source.

Much like gold's resilient strength in the face of a sustained U.S. dollar rally, this is indicative of a turning point for gold. 

And Friday repaired a lot of technical damage. At veteran gold observer Jim Sinclair's JSMineset site, correspondent "Trader Dan" said in his daily analysis:

"Gold rebounded sharply ...through the 10-day and 20-day moving average and...above all the moving averages once again.

"Price action indicates the presence of strong buying support on dips with the usual suspects active on the rally...this price action is giving the physical market buyers time to become acclimated to the new and higher price level above $1200."

This conforms to the position taken at Bill Murphy's LeMetropoleCafe webzine, which among many other things watches Eastern gold prices as measure of physical market vitality. A piece posted on Friday was laconically entitled "India buys," and also noted that Vietnam, an interesting newly-significant gold market, appeared to have moved to the buy side as well. Stories about strong gold buying by European Central Bank-despising Germans have been appearing here and elsewhere for several days.

All of this gives resonance to the remarks of another Old Gold Hand, Harry Schultz, in his GCRU service on Wednesday morning:

"Bullion's capacity to shrug off the shackles of intervention at this crucial chart point ...invites a near term re-test of the May 2010 high -- with a possible overshoot towards the $1345.00 measured target ... and $1425.00 theoretical upside target. On the downside, a sustained break below bullion's March uptrend line (now $1178.50) would be necessary to destabilize what appears to be the energetic resumption of gold's primary uptrend."