Gold Dead-Cat Bounce Or Start Of A Rally?

New York (July 16)  As we have discussed in the past, markets never announce themselves. With gold rallying this morning, the question is: Is this a dead-cat bounce or the start of a rally? There is no way to know; however, establishing the support level is the key at this point.

For the last few days, we have been watching the $1,235 -1240 level and have stated that we would stay long until those levels were violated. There have been a couple of attempts to break down, but each time buyers stepped in.

With this morning’s rally, we are watching the support levels of $1,235-$1,240 but also the resistance levels of $1,248-$1,250. The action around either one of these levels will help us decide what will happen next. We have no interest in being short gold but will close longs below $1,235 until we can identify a new buy level. For now, we will remain cautiously long.

By 8:00am EST spot gold was basically flat at $1,274, while spot silver slide 3 cents to $15.81. However, spot palladium fell nearly $6 to $939.

KitcoNews