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Upside Reversal for Gold


Very interesting that spot gold pierced its prior low early today, but has since reversed strongly by about $30/ounce and into positive territory despite downside continuation in the Euro/USD to new multi-month lows.

Yes, my pet theory has been that at some point sooner than later, gold will become increasingly "used" as a flight-to-safety vehicle as Treasury bond yields press lower and lower. As we speak, U.S. 10-year T-bond yield is pressing on 1.62%, breaking last September's low of 1.68%, corresponding to an upmove in the iShares Barclays 20+ Year Treas Bond (TLT). This move appears to have coincided with the upside reversal in spot gold, regardless of the negative influence of the Euro/USD.

Let's understand, however, that to confirm that spot gold has established a significant low and has emerged from an otherwise sideways congestion area, it must hurdle $1584.20. Right now, spot gold and its ETF, the SPDR Gold Shares (GLD), are acting great, but still remain "in the middle of nowhere" from a pattern perspective.

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