All the pieces are in place for a major uptrend in gold

All the pieces are in place for a major uptrend in gold to begin right away, and it appears to be starting as this is being prepared. The Commercials have cleared out virtually all of their short positions, for a massive profit of course, meaning that the slate is wiped clean for the game to start over anew. Public opinion and sentiment towards gold remains rotten, which is exactly what you expect to see at a major low, with the investing public at large, having been duly “educated” by the mainstream media, harboring a negative attitude to gold and if anything inclined to short it. Lastly, seasonal factors couldn’t be better – August and September are traditionally the best months of the year for gold.

On its 1-year chart we can see that gold had already broken out of its steep downtrend in mid-July, since which time it has been held in check by its falling 50-day moving average, which is now starting to flatten out, so that a bull Flag appears to have formed as the price retreated back along the top of the trendline that it had earlier broken above.

This Flag implies another upleg, which appears to have started this morning, and this uptrend could really gain traction soon if the price breaks above the nearby resistance shown, given the huge speculative short positions that have built up and the consequent potential for massive short covering. The gap between the 50 and 200-day moving averages provides a measure of how oversold gold is. Of course, breaking above the strong resistance at the earlier major support in the $1550 area that failed back in the Spring will be a tough nut to crack, but we will have to see how gold shapes up approaching it, in order to assess the chances of an early breakout above this key level. Read more >>

374,000 jobless claims - expect revision to 377k by next week

Initial claims were unchanged from last week - thanks to the now ubiquitous upward revision of the previous week's data. This is the highest print in six weeks and the third week in a row that the claims data has been greater than expected. The market is unsure - is this enough pre-FOMC to make a real difference or just more 'seasonal' noise? One thing is sure - the trend is higher in the last six weeks, hardly a positive sign (as the 4-week moving average rises 1,500 to 370,250) - and after the standard upward revision today's 374k claims will be 377k by next week. Read more >>

Four-Week Jobless Claims Average Reaches 2012 High

The number of Americans filing new claims for unemployment benefits was little changed last week, according to government data on Thursday that suggested the labor market was struggling to regain momentum.

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000. Economists polled by Reuters had forecast claims falling to 380,000 last week.  

The four-week moving average for new claims, considered a better measure of labor market trends, increased 3,500 to 386,250 — the highest level since early December. Read more >>