Gold Update 2 Nov 09

alt: -1- of a a of “c” b

Gold (Dec Futures) - Daily a

(W)

a “b” “d”

b

“e”

(X)

:”c”

“a”

This is the model we’ve been using for some time now. We were looking for a midOctober conclusion of the “thrust” out of the triangle (X)-Wave. The market ran into some trouble at that point in time, but the decline has so far only been a docile “flat” correction. Now the market is bouncing vigorously from a 50% retrace of the last wave higher. The upside risk is that the “a”-wave has not yet concluded and that we’ll ‘sub-divide’ higher to $1,129/oz. Gold bulls would need to take out $1,073 to buttress this case.

alt: -1- of c

c of “a” 1072

Gold (Dec Futures) - 180 minute The move down from 1072 was a “flat” correction, a weak -abc- corrective move that held a very nice chart support level at 1027. -c- wave targets: 1066 as 138.2% of -a- = -c1073 as 161.8% of -a- = -c-

-b-

-c- of b?

-a-a-

a

-b1027 -c- of a alt: -2- of c

986 b From the 942 zone, where the triangle concluded, we can observe a “zig-zag” move to 1072 with what looked like a perfect a=c completed. The move to 1072 probably only concluded an “a”-wave. This means we should see several more weeks of “b”-wave activity that should be able to take gold back below $1,000/oz. This count gets tossed into the trash can on a break of $1,073/oz. 942

If the market can decisively take out 1073, it would look like the mvoe from 986  1072 was only the wave-1 of the larger degree c-wave and that we’re facing tow more waves higher. The 161.8% of a=c target would take us to $1,129/oz.

Declines of the last week were caused by speculators leaving the market, but it was merely a “blip” on this chart. Speculators remain very long Gold.

December Gold Futures (Line on Close)

Small Specs increased shorts as market was falling.

Net Length of “Small Speculators”

Source: CFTC