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

Technical Read: GLD did not retrace much of the Nov 14 rally before it moved modestly higher. I am not sure the backdrop (see below) warrants a substantial bullish move but the technicals are improving. The real challenge on this front is whether the buying pressure is sufficient to move a modestly overbought market higher. The models are still neutral.

Backdrop:

• Catalyst 1 – The US Dollar index appears to have paused but the price action is not indicative of a trend reversal. This is still mildly bearish for gold.
• Catalyst 2 – Several posts ago, I opined the next likely move for the range-bound S&P 500 would likely to be up. Today was a breakout for equities. More to follow. This is bearish for gold.
• Catalyst 3 – Japan unveiled the economic surprise of the week. The third quarter GDP posted a 1.6% contraction. This on the back of a 7.3% contraction in Q2 puts the third largest economy in a technical recession. The current policy tug of war between fiscal easing (stimulus) and raising taxes (tightening) does not provide an optimistic resolution.
• 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