Model Gold Portfolio: Neutral (Signal 10/27).

Technical Read: GLD blew though resistance on the back of a daily bearish reversal in the US dollar (see catalyst 1). The move came after several days if decreasing volatility (closing price differences) for the yellow metal. Never sell a dull market, they say. Gold traders should now set their sights on determining if this means a bullish move is now in motion. The alternate view is that it was of the Friday-short-squeeze flavor. The Friday pop may be too much (overbought) for a safe bullish entry immediately, but it has our attention. The models are still neutral.

Backdrop:

• Catalyst 1 – The US Dollar index pushed higher on Friday but then reversed. The sudden appearance of technical buying in the euro and some disappointment in US payroll number could have been factors in the slide (er… ISIS announced its new currency too). Though the dollar reversed for the day, for it to be bullish for gold, the greenback must reverse its bullish trend. Friday’s currency action did NOT accomplish that (look at a chart). This is a neutral factor for now.
• Catalyst 2 – Equities were unfazed by the currency/gold action. The S&P 500 ticked up less than a point, not uncharacteristic of recent days. This is mildly bearish for gold.
• Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.

GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com