Gold quiet on Monday waiting for FOMC and next short term cycle to Nov 7th by Bill Downey

Lots of economic reports and the FOMC starts on Tuesday and ends Wednesday. Europe’s mess gets worse and worse and so does everyone else’s.
Also watch the US dollar. IF it breaks above 87.20 on a closing basis, 90 becomes the next target.

Gold reached the blue trend line which was the uptrend line that was broken in September turning the medium term trend back down. Support is first at the green moving average at 1225.50. The low on the last pullback dip was 1222 and that is also a weekly reversal number. Thus from about 1218-1222 is a support area but also from about 1195-1202 and from 1210-1213. Monthly support is 1156-1182. Resistance is 1237-1245 and a close above the upper blue trend line would favor a test of the next weekly resistance at 1272-1284.

CYCLES
The rebound into October 23rd (plus or minus 72 hours) has taken place and the short term cycle is due to move sideways to lower into the Nov 7th timeframe. (Only an inversion would change the outlook). Either 1238-1245 or 1251-1255 area should offer highest resistance this week. A close above the red line favors a cycle inversion and a move to 1272. Odds are only 25% on that score but we mention it in case. Odds overall see us sideways to lower into November 7th (plus or minus 72 hours).

In addition and perhaps the MOST IMPORTANT point of this week’s update is that HIGH at 1255 on the chart below was an EXACT touch of the failed uptrend line and it tested the 50 day moving average also. That is the basic line in the sand. A CLOSE above that line in the sand will favor a stronger gold market and a move to the higher dotted trend line at 1272-1284. As long as price is under the RED CHANNEL LINE, the bears have control of the overall situation. The other key factor is the RED cycle high and blue cycle low. THAT is the rotation we need for a bull trend to develop.

If the pullback is mild into this next cycle (or an inversion occurs) odds will strengthen that gold will rally into the 3rd week of November, and potentially year end. First target will be the upper trend line.

Silver
Silver (and gold stocks) were not able to turn their intermediate term trends up duing the last gold rally. Silver needs a close above 1762-1780 in order to reach next resistance at 1806-1833. Support lines in the 1625-1650 area at the moment and on the long term charts just above 15. All downtrends remain in place at the moment.

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