8 days ago I sent out a tweet calling for $1150 gold within a couple of weeks based upon strong seasonal tailwinds and the likelihood that we would get some significant short covering after futures speculators had become over zealous in piling on short positions:
This morning we’ve traded as high as $1147 in December gold futures after a $50 rally in the last couple of weeks and gold has now risen $75/oz since the low at $1072.30 on July 24th. Now comes the tough part. Sentiment is starting to turn less bearish and most recent failed rallies in gold have stopped after a roughly $60-$80 upside move. Moreover, there is an ample amount of resistance right around the $1150 level:
The easy part is over for gold bulls. An unexpected short covering rally when everyone is extremely bearish is what’s to be expected. With the market more balanced after the recent rally the task becomes much more challenging for gold to continue higher above $1150. However, should the yellow metal do just that, it would offer a notable bullish change of character.