Quick update in gold.. Quick update in gold..
Price action have been holding up ridiculously well for the past month despite the record pace of rallying in the stock market.
SPY:
However, the divergence between USDJPY continues which does not bode well for stocks.
USDJPY:
On the lower timeframe perspective of gold (4~ 12 hour), it does seems that we have made a higher high price here, however I will not rule out of a possibility of a re-test of $1190 support level.
On what seems to be a head and shoulders pattern here, I highly doubt there will be any follow-up given the spike in VIX on Friday's closing. I believe that the second leg down on stocks may start to develop soon which should push gold further up coupled along with the divergence developing in the USDJPY pair.
Look out for a quick spike towards $1400 /oz area.
However I wouldn't entirely consider this rally in gold to be a bull market. It was badly oversold and was already overdue for a bounce with the falling wedge that have been building for more than 4 years anyway.
In other words, there is a possibility that this is a counter-trend rally in a bear market for gold.
Silver in the meantime looks pretty compelling, pretty much abandoned by the mainstream. At $1400/oz gold, I'd trade all my physical holdings into silver.
XAGUSD:
Gold silver ratio:
