Gold's Price Pullback Appears Brief

Brief as our missive is this week, so we deem same for gold's present pullback. Greetings from Squaw Valley, where six months ago we'd better than 22 feet of snow up at High Camp. Yet just as it has melted away, so has gold melted up, establishing a high for the year a week ago at 1362, only 15 points shy of last year's peak up at Base Camp 1377. And we see that level getting at least tested before the year is out, notwithstanding this past week's 2% price decline, gold settling yesterday (Friday) at 1324.

Here below are gold's weekly bars, the blue dots of parabolic Long trend accelerating their upside ascent and the dashed linear regression trendline rotating further upward. As cited a week ago, we look for "price-bunching" around the 1300 area to be supportive for gold, from where the next attempt for 1377 can commence. Without meticulously combing back through the raw data, this is as strong a weekly bars picture as we've seen in recent memory:

Here's another strong picture that favours gold: the Economic Barometer. To be sure, gold has benefited of late from geo-political and natural disasters. However, history has shown us that price shall oft wane back from where it came as such events pass and fall from the newsflow. We're seeing that phenomena now and may so do for another week or two. What it seems many are not seeing is the ongoing plunge in the Econ Baro. We learned this past week that for August, Retail Sales shrank, Industrial Production shrank, and soft data survey indicators from both the Federal Reserve Bank of New York and University of Michigan shrank. The Federal Open Market Committee may shirk such issues of shrinkage come their policy statement this next Wednesday (20 September), but neither shall they raise their Reserve Bank's Funds rate. They'll focus on inflation (more accurately stagflation?), and later revert to more monetary accommodation, gold's greatest exaltation:

Next to our two-panel graphic of gold's daily bars for the past three months on the left, and the 10-day Market Profile on the right. You can see that gold's baby blue dots of 21-day linear regression trend consistency have cracked, which lends to our notion of the "price-bunching" area 'round 1300 getting tested for support; meanwhile, this past week saw price run the gamut from the top to the bottom of the Profile:

Similarily we've the same assessment for Sister Silver, her "price-bunching" support area being 'round 17.00:

Finally we've this one-year view of gold along with its smooth pearly valuation line, (price's changes as regressed to those of the other primary markets that comprise BEGOS: Bond / Euro / Gold / Oil / S&P 500). The oscillator panel at the foot of the graphic is price less value, for which as noted in the website commentary over the past couple of weeks, we've found gold to be some 50 points "high", such that the pullback we're now seeing is not untoward. The good news therein is that the smooth line itself is catching up more to gold than vice-versa:

So in sum from here in the high country, we see gold pulling back near-term to the 1300 level as perfectly normal within its overall ebb and flow. Price has been on a fine run, and upon syncing with the above valuation line, finding support in its "price-bunching" area, and most importantly taking into account the declining, indeed monetary accommodative Econ Baro, we ought then see gold whirl back 'round to continue its climb to Base Camp 1377!

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