Aug. 21, 2012, 3:39 p.m. EDT
Are gold cycles turning up with
About Mike Paulenoff
By Mike Paulenoff
My cycle work in gold indicates we're due for a
few months of strong upside action.
Using cycles based on 5.5 months, gold was due for a
low between June 11 and 15 after its December 29 low at $1522.48.
The two lowest-lows in and around the anticipated
cycle low window occurred on May 16 at $1526.98, followed by a successful
retest on June 28 at $1547.87. Every bout of subsequent weakness has held
above the May-June lows, suggesting that, indeed, a 5.5 month cycle low
has been established, presumably ahead of two months of bullish price
Today, spot gold has broken above key, 10-week
resistance at $1625, and has continued higher quickly towards more
important resistance at $1640.30, the June 6 high, the first signal that a
new up-leg is in progress. The next immediate challenge is a test of the
September 2011 to August 2012 down trendline, now at $1672, a break of
which should trigger upside continuation to $1680-$1700, thereafter.
At this juncture, only a failure to hurdle $1640.30,
followed by a decline that breaks back beneath $1625, will indicate that
spot gold has disappointed and trapped the bulls, yet again this summer.
Barring such a bull trap, my intermediate-term
pattern and cycle work will be arguing strongly that spot gold has entered
a new bull phase that should revisit the September 2011 high at $1921.05.