Cautious on Gold
In reaction to the BOJ Easing Announcement of more QE last evening, spot gold popped to a new multi-month high at $1779.77, but has since come off of those highs into the $1768 area so far.
Although the minor weakness has not inflicted any significant damage to the post-Aug 31 upleg from $1646.22, let's notice that this morning's new high was NOT confirmed by my 4-hour momentum gauge, which, if nothing else, is a warning signal that the near-vertical 8% upmove is tired and, in the absence of a very bullish catalyst, could be on the verge of a correction.
That said, spot gold must break below key near-term support at $1755/52, which is 170.40/00 in the SPDR Gold Shares (GLD), to trigger downside follow-through towards $1725, or GLD 166.50.
It’s time to be a bit more cautious in gold right here.