Is Gold Getting Traction From The Long Side?

This year Gold has been reverting from the September 2011 all-time high - coinciding with the anxiety driven height of the euro-banking debacle, which continues to unfold. Following coordinated swap-line interventions last November, which brought 'confidence' back into equities, we've seen a year-long price contraction in the the Gold market. Given that the Gold trade reflects true 'anti-system' or 'anti-government' sentiment (as it relates to 'trust and confidence' in governments fiscal responsibilities/capabilities), then are we on the cusp of another confidence-melt-down in risk assets -- indicated by the supportive 'bid' in the gold market -- which is finding more buyers than seller > 1680 critical price level?




Purely from a 'bottom-up' supply-demand dynamic, we can analyze the price-action in Gold over the past year by comparing 'demand-driven long' opportunities to 'supply-driven short' events:
From the chart below, we can visualize the 'green up arrows' that take the metal above 1680:
Trade 44
Trade 46
Trade 54
Trade 56
Trade 58

These long-buying opportunities drove the market into liquidation events:
Trade 45
Trade 47
Trade 55
Trade 57

We see the price now settling and stabilizing > 1680 (purple-line), which is the true year-long price regression. As well, we see that Trade 55, Trade 57 on Momentum Selling opportunities failed to take the market < 1680. We have multiple long accumulations developing over the course of the past 12 months below the 1680 level (5), which may be signalling a developing 12 month accumulation pattern, where the liquidations are shorter-lived (Trade 55, Trade 57) and the buy-signals (green arrows) are sustaining price at higher levels.

On Friday we were given a 'Long' Momentum Buy Signal in Gold at 1704.6 (Trade 58) on a 'Spring' as the market made a new pivot low, but found buyers coming back in - again. Trade 50, 52, 54, 56, and 58 are all higher Momentum Buying Signals and indicate a strong developing trend in Gold.

I've also been keeping my eye on the last intermediate top in Oct (1800 level),  reflecting a weaker-selling-driven pullback. This top at 1800 is vulnerable to a retest.

I showed a chart of the GG (Goldcorp NYSE) and Gold futures correlation last post; I want to look at this image again as it shows a 'weaker' broad-based Gold complex, suggesting that Gold may not be ready to 'launch', but it may illustrate a better buying opportunity in GG vs Gold futures, as Gold futures have not followed GG lower and so the correlation needs reconciliation, which may become evident through GG buying.

I'm not suggesting that Gold is ready for a big move by any means. But given the support > 1680, the market is beginning to show confidence in Gold again, and Friday's 1704.60 'Momentum Long' signal may represent a favorable R/R long-entry with a tight stop below the 1680 level, given that the Oct 1800 top was driven by weaker selling, we could see a move in Gold back up to 1800. We have a potential 5R trade -- 20$ of risk, 100$ in profit above 1680.

One of the things I will be looking for is a Momentum Long signal in the gold equities -- if it doesn't come, I would be very suspicious of this latest Long signal in the Gold futures.

Lastly, we can evaluate any Gold-decoupling from broad-based 'risk' through the Day chart overlay below, which now shows that Gold is outperforming equities, and AAPL in the short term.