DAN NORCINI''S THURSDAY COMMENTS

Hourly Action In Gold From Trader Dan


Posted: Jun 17 2010 By: Dan Norcini Post Edited: June 17, 2010 at 2:34 pm
Filed under: Trader Dan Norcini

Dear CIGAs,

Gold is running as the “anti-Dollar” once again in today’s session moving higher as the greenback drops lower. This comes on the heels of the US equity market showing weakness as a result of the horrific unemployment numbers and a very disappointing Philly Fed Factory Index reading. Two weeks ago, this would have sent the Dollar higher as a “risk averse” trade but now the Dollar is moving lower on lousy US economic news. My how fickle the sentiments of investors has become – “She loves me; she loves me not”. All of this is serving to reinforce the skepticism that abounds in regards to any so-called “recovery”.

One gets the distinct impression in watching the gold price action that the metal is beginning to simply trade on its own merits, independent of the conflicting cross currents swirling hither, thither and yon. As mentioned previously, nervous, uncertain investors want something tangible and fixed in the midst of this maze of perplexity. Gold is what it is – the pinnacle of safe havens and the ultimate in wealth preservation. Were it not for the price capping game that continues at the Comex, it would be considerably higher for in real terms (adjusted for inflation) it remains nearly 45% below its all time high priced in US Dollars.

Gold made several attempts to crack $1250 and hold above that level but the price riggers were busy absorbing all of the bids in their efforts to contain the metal. There was good buying throughout the entirety of the session, with decent volume although it tapered off when the metal could not push convincingly past $1250. I would like to see a 100,000 + volume reading during the New York pit session on any upside breakout. That would indicate that we have buyers serious enough to take on the infernal bullion banks and their pestilential non-stop selling charade. Open interest indicates that we have some room for new buying as we are still well below the recent peak above 600,000.

I should point out here that gold did put in a RECORD HIGH CLOSING PRICE for a continuous front month contract. That is impressive technically and favors the bullish cause, in spite of the obvious capping attempt by the banks.

The silver chart looks like it is managing an upside break of the recent congestion range trade but I would like to see it get above $19 to feel more confident about it. Copper can at times work to pull silver lower when the red metal moves down so silver’s strength is especially noteworthy.

I like the chart action of the HUI as it garnered additional upside follow through after it was able to poke its head through the top of the recent congestion zone near 470. It looks like it has a pretty clear path towards 490 – 491 where sellers can be expected to show up as that is the initial resistance zone on the price chart. It will need to push through that to set up a run towards the May high just above 500. That level is going to be a tough nut to crack. However, if it gives way, the shares are going to force a lot of shorts out. Think of those ratio trades of the hedgies… As I write this commentary another wave of buying is coming into the mining shares even as bullion moves a bit lower – looks like some of those spread trades are coming off.

Initial downside support is at this week’s low in the 452 region, followed by stronger support near 440. Technically the momentum indicators look good. I will be especially interested in seeing how these things close for the week. A close over 487 will worry a large number of short sellers and would hasten further unwinding of the ratio trades.

DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/06/June1710Gold.pdf