Gold still Preparing for a Comeback while a Storm is Brewing for U.S. Markets

For the first time in 2012, the U.S. markets are dreading an impending European debt crisis - Leland National Gold Exchange.

European markets (more specifically, the DAX - German blue chip stock market index) appear to be breaking down on strong volume, but unfortunately the U.S. markets seem ready to follow.

In response, we've got some pretty good setups approaching for both gold and silver. Both metals are showing signs of bottoming out and are now poised to move higher soon. But while gold did rise 1.81% this past week, it still has lots of work to do. In order for gold to hit the $1,700 area, we may need a couple of more weeks to build up a decent support level.

It is during this time, that one might be able to load up on some more gold, and possibly silver - that's what I'm doing. According to both technical charts and fundamentals, I do not think gold can fall any further than the current area. And of course all it takes is a huge order to get dumped on the market to suppress gold prices. Fortunately, a recent attempt at this only held gold down for a very limited time. This tells me that the yellow metal is far from sold out...

Silver dropped about 0.55% last week and currently remains within the tight range of $31 to $33. Similar to gold's condition, the moving averages for silver are also going to need a little more time to build support, which is also great for you smart early-shoppers. In the long run, I'm not really expecting any great moves out of silver for at least a week, unless this European crisis hits hard this coming week and the combined effect on the European and U.S. indexes start to drag down the commodities markets as a whole.

Platinum fell 0.81% this past week, but technically, a horizontal support level and the 100 day moving average seem to be holding the prices in place for now. Still, a breakthrough may occur down to the $1,500 level because at $1,500, we've got a much stronger magnet - from which we also then gain stronger support afterwards. Palladium, on the other hand, rose 1.47% this past week, but I think we are going to need more developing technical data before hinting at a rise OR drop at this juncture.

In other sources, according to the World Gold Council, "Demand for gold is on the rise as investors are using it as a tool for capital preservation." Now THAT is a rather bullish indication.

In opposition, Reuters mentioned that “Heady [gold] forecasts of $2,000 per an ounce are receding fast as the [US] economy stabilises.” The news agency’s most recent price poll shows only one forecaster in 33 still expecting gold to average at the $2K level this year, where previously there had been four out of forty-five projecting such a price average.

It looks like gold's bullish forecast is split down the middle. Heavily. When it comes down to it, do we take the World Gold Council over a major news agency laden with analysts? Or vice versa? This is actually a tough question. Sure the WGC may be biased since it was established in 1987 for the main purpose of promoting the use of gold and stimulating demand from industry members, consumers and investors. This is definitely a somewhat biased position. Reuters on the other hand utilizes many professional industry analysts, but lately, they seem to be attracted to doom and gloom news slightly more than anything with a remote ray of sunshine. This can be viewed as a somewhat biased disposition as well.

Personally, it's times like these that I use technical measurements to break the tie. Yes folks, this is when the quiet nerd in the high school classroom stands up, spouts out a bunch of gibberish to settle an overly extended disagreement between the cheerleaders and the football players. And these technicals seem to show something of an army amassing support under the cover of foliage, readying for a full frontal charge to the upside.

At this point onward, I'll be looking forward to an interesting two weeks that may reveal gold prices being overly sensitive to fundamental news items as they unfold - especially in Europe and the U.S. ...

Be safe, be wealthy and above all else, be happy.

- Mitch

Sponsored by Leland National Gold Exchange

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