Larry Baer's Technicals: Gold Rush Back On With QE3, Dollar Trending Lower & Treasury Yields Surging

September 17, 2012

Technical signs point to a potential boost for gold prices, with additional support offered by QE3.


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Gold has rallied significantly in the last six weeks, after lower-to-sideways price movement for most of 2012, looking as if it may be poised for another major move to the upside.

This move upward may get strong support from another round of inflation, or even hyperinflation, causing gold, silver, the S&P 500, high-grade copper and other commodities to rally. The Federal Reserve’s announcement of a third round of economic stimulus (QE3) may fan the flames of inflation further, causing the U.S. dollar to plummet and spurring commodity prices even higher. I would also be very surprised if QE3 was the last of the Fed’s economic interventions.


The trend is up and I have a fresh buy signal (issued 9/13) on the daily chart for gold futures. Gold has already established that it is in a longer-term uptrend, and has issued five buy signals since the trend changed to up at the end of July. Also, gold is super-trending on the daily chart, which I define as a market that is trending above its nine-period SMA.


Gold Daily Chart

Sector Performance: June 2012
For a larger view, please click on the image above.


On the weekly chart, the trend has recently changed to the upside for gold futures. This is the third week following the trend’s change to the upside and gold is entering a pivotal area.

Gold is displaying a formation that suggests that we may have one or more week of follow-through to the upside. It is too early for gold to establish that it may be in a longer-term uptrend on the weekly chart, so we will have to wait to see what happens. However, I did note that while the trend was down for gold on the weekly chart, it was never able to establish that it was in a longer-term downtrend, which is, in my opinion, significant.


Gold Weekly Chart

Sector Performance: June 2012

For a larger view, please click on the image above.


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