The gold markets as you can see have been shopping around for some time now. If there's a good way to punish yourself, it's becoming an analyst and trying to predict the future movements of gold. And that is exactly what I'm going to try to do in this article.
All that being said, it does look like you're trying to form some type of base in this market. The problem is that when you have a significant move lower like we've seen since the summer of 2012, quite frankly it takes a lot of choppiness and indecision to move the markets in the opposite direction. After all, there is a lot in the way of volume between here and there. Looking at this chart, is very easy to think that we could continue much lower, and that certainly is a possibility. However, what I am starting to think is that perhaps we are in an accumulation phase, or in other words the time when the so-called "smart money" is getting involved.
The latest low on this weekly chart is higher than the one before it. This is quite often when you see as the trend starts to change. The problem with predicting the month of November is that while the market seems to know that the Federal Reserve is going to taper off of quantitative easing very soon, it doesn't really know what to do with that knowledge at the moment. That's because they are starting to worry about whether or not there's going to be global growth. If there's no growth, then the US dollar tends to do fairly well, which can work against the value of gold. However, I do believe that eventually the dollar gets pummeled significantly, it's the timing that's going to be the difficult aspect of this analysis.
It is because of this that I suggest that perhaps buying physical gold will be the way to play it in the month of November. Taking the leverage out of the play can save you a lot of heartache. I see the $1400 level as being the beginning of significant resistance all the way to the $1450 level. It's going to take a significant amount of pressure to the upside to break through there. I would suspect, and based upon a lot of conversations I've had with friends of mine in New York, there are people out there currently accumulating gold positions waiting for the hammer to fall on the US dollar. Above the $1450 level, this market will just absolutely check out to the upside. As far as breaking down, I see so much support below, it's going to be very difficult to do so. My suspicion is that the month of November probably won't bring in much in the way of fireworks, but rather more accumulation.