Thursday September 19, 2013 11:21Go

Thursday September 19, 2013 11:21

Gold held 1300 for most of the session yesterday before seeing bullish volatility ahead of the FOMC's decision to not taper the $85 billion in monthly bond purchases. Gold had stretched itself to above 1310 ahead of the Fed but once the decision to not taper was official the market reached a high of 1350.5, just below the major resistance point of 1352. Gold pulled back and held the 50 day moving average at 1340 before making its second push which reached a high of 1367.8 on the session. Today's session opened up initially maintaining the momentum in Gold we originally saw reaching a new swing high of 1375.4. Before getting into the technical’s let’s acknowledge that the Fed's decision only prolongs their looming exit. This has sparked an initial bullish move in Gold but the question we will have answered to conclude the week is that did this market get too far ahead of itself once realizing that this does not change the scope 9, 12 and 18 months out. The big hedge funds which have sold this market from the 1700, 1600 and 1500 levels are not reentering because the can has been kicked two to four months down the road. Do not forget that Gold is an inflation hedge and the Fed did not reduce stimulus because inflation is far from their objective. Now, major resistance will be found at 1379.6 and above there at the 1383-84.1; Gold MUST close above here this week to signal that there is a further bull leg in this market and a failure to do so would start to confirm that this move is likely only a knee jerk reaction. With a retracement level coming in at 1362.8, a close below there today take a lot of steam out of this market likely bringing it to the major line in the sand at 1350.5-52. The first test to 1350.5-52 will be a solid buying opportunity, but a close below here will be more than discouraging to the bull camp and signal a likely failure.

Resistance - 1374.3-75.4*, 1379.6***, 1383-84.1***, 1395.2**, 1401**
Support - 1362.8**, 1350.5-52***, 1345.9**, 1338-39.4**, 1331*

Rich Ilczsyzyn
Senior Commodity Analyst