Gold approaches low, but miners and silver hold up

Gold (NYSEARCA:GLD) has been down for 14 of the last 16 trading days, and we are now knocking on the door of the previous low of September 30. Gold has never been down 14 times in 16 days since the mid 1970’s. We also have the very rare circumstance of gold trading below its lower Bollinger Band (the lower blue line) for 3 straight days.

Gold’s uptrend since late July is now in danger of rolling over, and the most obvious catalyst for a turnaround is the jobs report, the Non Farm Payrolls scheduled to be out today. Most technical indicators point to a bounce on the report. The question is how much of one.

And a crucial question it is indeed. A weak bounce on the employment report could indicate a fizzling rally, and an eventual move below the previous low of $1080. This would indicate that the bear market has not bottomed yet and there is another leg down to go. A strong bounce, say $20 to $30 could set up another move higher to a top at around $1,210. The big movement should come at around 8:30am EST, when the report is released to the media.

Gold stocks (NYSEARCA:GDX) and the junior miners (NYSEARCA:GDXJ) have been hit significantly over the past two days. And yet, the silver lining, or shall I say gold lining is that the HUI Gold Bugs Index (^HUI) is still comfortably above its previous lows of 101.28. This means that despite the poor showing of late, gold stocks are still outperforming the metal since bottoming. Silver (NYSEARCA:SLV) is also holding comfortably above its previous low.

In the end, if gold and the rest of the metals complex aregoing to turn around, it will most likely be today. Watch out for a contract dump on the Comex this morning. As a bad jobs print is traditionally bullish for gold, large sell orders on the release of a bad jobs report should be met with skepticism, and could just be an attempt at a stop run that will be quickly reversed. A good jobs report is traditionally bearish for gold, but precious metals are so short term oversold that even a good jobs report may not be able to bring gold down much further.

Where the metals are headed over the next month or two should be determined today or Monday at the latest.