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Gold attains our target, remains strong

Posted: 09/16/2012 - 11:04 am

On September 4, we said that we were bullish on Gold making the case for a rally to 1750 (read: Bullish on Gold). Our view was that the yellow precious metal was shaping up for a big move and that a major driver for it would be the decisions of the central banks on how aggressive their money printing policies would be.

Well, the chart did not lie. At the time, we said that the price action is indicating that a big move is lying ahead and indeed it was. The metal hit a high of 1777 on heavy trading rallying 5% since September 4.

While one could argue for some pull back, we believe there is more upside left despite the increasing possibility of witnessing short term retracements. As it stands, it seems logical that Gold would find some resistance around 1800 but our view is that we are in for a bigger move.

How does one position at this point, you ask?
While we view an exposure is warranted even at the current price, our entry points would more likely be timed with the potential pull backs. We are buyers at 1700 and even more aggressive buyers should further retracement unfold.

That said, it goes without saying that following the Macro picture is imperative. Right now, the world seems fairly confident that the central banks will do whatever it takes to support the major world economies. Any shock to that assumption would trigger the pressing of the risk-off button: Not that this would be bad for Gold (that is actually why we like the metal) but it may well trigger irrational sell-offs.

Have a yellow one…

click to enlarge

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