Technical Outlook:

Dec Gold: Gold prices continue to post new record highs with Thursday’s move stretching to 13881 before pulling in to close at 13776 on the day. This market is a runaway train right now and it’s tough to step in front of it on the short side, however, daily charts are beginning to send out warnings. Thursday’s session ended with the formation of a ‘Shooting Star’ candlestick, a potentially bearish signal. In addition, the RSI has been running overbought and now showing negative divergence in a similar pattern seen in Nov. 2009 that resulted in a violent $150 correction.

We are not suggesting going short, but the thinking is to lighten long positions or buy some protection, possibly puts. All that being said, we still need to see confirmation, starting with a settlement below 13700 on the week that would indicate the beginning of a peaking turnover. If the 13881 record high is violated, anticipate a run at 14000 while still remaining cautious with the overbought RSI.

Today’s bias is Flat to Lower based on the ‘shooting star’ pattern with scalping opportunities on both sides. Sellers can look to scalp against the 13790 Pivot and the 13830 X Resistance zone with a target at 13711-13700 XX Support if 13757 is penetrated. A drop below 13700 accelerates selling today targeting XXX Support at 13660-13650.

Daily Gold Chart:

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Daily Gold Compressed Chart:

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