Despite calls for a big sell-off, gold holds above the key $2,300 support level and — as we noted on Monday — may be coiling for a new breakout.
Holiday markets have often been a minefield for gold investors, as bears have often used the thin trading volume to bend the gold price to their will.
But that kind of market manipulation is a lot tougher to accomplish these days, with gold in a secular uptrend and Asian markets now setting the global price.
The result? Smart players in the paper gold and silver arenas are choosing to simply step out of the way of a juggernaut.
And that’s never been more apparent than today, as gold and silver are taking off to the upside in the midst of a major economic data dump, just as the U.S. markets are about to go on holiday.
Is The Coiling Spring Unwinding Now?
As you’ll remember, on Monday I alerted you to a narrowing of the Bollinger bands for gold — a situation that has been a reliable predictor of a price breakout in one direction or the other.
In a bull market, these periods of low volatility represent a digestion of previous gains, with the market figuratively coiling like a spring in advance of a new rally.
I wanted to warn you of this possibility because so many analysts were calling for gold to break below the key support line at $2,300 in a big sell-off that would take it to as low as $2,100.
It’s too early to declare victory, but so far the Bollinger band indicator is winning the argument.
Look at what gold’s done since I warned you that this sideways trading range could soon end:
As I write, gold’s up about $32, while silver is trading nearly a dollar higher.
The fundamental story supporting this move revolves around surprisingly dovish comments from Fed Chair Jerome Powell at a central banking convocation in Portugal yesterday, plus private job-market data showing an employment slowdown.
The big June nonfarm payrolls report will be out Friday, so that represents some risk and/or opportunity just ahead.
From a technical standpoint, it does seem like our “coiled spring” view of gold is being validated. A big rally right now, in the midst of an apparent summertime slowdown, would be a big shock.
And that might be just why it would happen.
AIs Argue Economics
Like so many others, we’ve been playing around with the common artificial intelligence agents to see how they might be able to help with our workflow. (Don’t worry — I’m still writing every word, for better or worse!)
Our research into AI took an interesting turn the other day when Alex Goldfinger, our resident genius and comedian who some of you recognize as our speaker coordinator for the New Orleans Investment Conference, decided to pit Google’s Gemini AI against OpenAI’s ChatGPT agent.
To have some fun, he gave Gemini the role of a Federal Reserve governor and had ChatGPT play the part of an Austrian economist, to argue Keynesian vs Austrian economics.
To have even more fun, he had them put their arguments in the form of a rap battle.
The result was something brilliant, hilarious...and frankly a bit scary.
It’s too long to include here, so I urge you to CLICK HERE to give it a read. And let me know if you agree that the “Austrian economist” was the winner.
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About the Author:
Brien Lundin is the publisher and editor of Gold Newsletter, the publication that has been the cornerstone of precious metals advisories since 1971. Mr. Lundin covers not only resource stocks but also the entire world of investing. He also hosts the annual New Orleans Investment Conference. To get Brien Lundin’s ongoing commentary on the markets at no charge, click here to subscribe to his free Golden Opportunities newsletter.
