Gold Price Hits Stop Sign At $1,240

New York (Oct 24)  Tuesday saw gold make an attempt to break out above our resistance level of $1,240, trading as high as $1,243 before failing and closing below. As we wrote on Tuesday, we expected the first run at $1,240 to fail, and it did.

The good news -- gold continues to make higher lows. The next test of $1,240 should create a breakout to the upside, taking us to our next target of $1,275. At the same time, silver is making another attempt at breaking out to the upside.

As long as these support levels continue to hold, all signs point to a big rally. Traders should be moving up their exit levels in case of failure, but the pattern looks great and should continue to knock out resistance levels on their way higher.

By 08:00am EST spot gold was down $4 to $1,226, whils spot silver slid 2 cemnts to $14.69. However, spot palladum plunged $12 to $1,116.

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