Dear CIGAs,

There was a disconnect between the Comex gold price action and the action of the mining shares. Comex went one way – down – while the shares went the other way – up.

Rollovers are occurring in the Comex world as February is getting ready to take its place as the lead contract with December going into the Delivery process. Remember, if you want to secure gold in size and want to avoid the high premiums currently being charged on the one ounce bullion coins, buy the December and take delivery of the gold and then keep it out of the warehouses.

Comex gold was taken lower today in front of the holiday period particularly with the dollar showing some signs of strength as dollar longs are attempting to prevent the technical price chart of the USDX from turning ugly. You can tell that the funds are doing the buying in the USDX because it bounced EXACTLY at the 40 day moving average level, a favorite level for this particular group to play at. Still, the bearish divergence on the USDX chart is a warning to the bulls that unless they quickly can push that index back above the 87.20 level, reinforcements for their side are going to be hard to attract. Stay tuned on this one…

The commodity markets were generally a mixed affair today with the energies all higher, particularly natural gas, while the metals were mostly lower with the exception of copper. Grains too were mixed. Generally, reading too much into the price action near a holiday is pretty much a waste of time so I am going to avoid that today as too many traders look to even up and take some time off.

Technically gold has met resistance near the 100 day moving average level that it has so far not been able to best while dip buyers continue to make their presence felt near the $805 level, which is right in the middle of the former resistance zone. Below this level, stronger support comes in near the $790 level and then the $770 level. I suspect that we will see very good buying should gold drop down to $770.

I should also point out that once again open interest saw another sharp drop in yesterday’s session. We are now down to a piddly 276,567 contracts as both longs and shorts continue to move out. Generally speaking, trading conditions begin to thin out from this point forward as we go into December and the year winds down with a corresponding lack of liquidity which tends to greatly exaggerate price moves. I can already see the effect in the spread between the bids and offers.

The HUI and the XAU charts are looking much improved. The HUI has now seen the 10 day moving average make an upside bullish crossover of the 20 day with both of those moving averages now trending higher. Those are a sign that the trend has now turned up. The actual index itself is fighting at the 50 day moving average which is near the 235 level. A close above that will get some of the specs excited. Also, the index managed to close above horizontal resistance near 225 and is closing in on downsloping trendline resistance which comes in near 250. One more thing, the bullish divergence that had been showing up in the technical indicators has now been fully confirmed. All in all, a lot of bullish signs are lining up technically.

To our American readers, enjoy your Thanksgiving Day holiday with your family and loved ones. We all have much to be thankful to God for! To those of our readers who abide outside our country – we will make sure to have an extra helping of pumpkin pie just for you!

Dan

Click chart to enlarge today’s 12 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.