Gold Technical Analysis October 19, 2011

The gold markets had a wild ride on Tuesday as the market fell most of the session. The headlines out of Europe stating that the EU might increase the EFSF bailout fund to 2 Trillion Euros pushed the market back higher, as it appears that the Europeans are getting ready to “print” more money at this point. It should be noted that the story is unconfirmed at the moment, and this showed up in the gold pits as gold is an investment people will buy in uncertain times.

The market is very leery of printing, and this should only help to bolster the demand for gold. The resulting candle for the day is a massive hammer, and it looks set to bounce from this point. A breaking of the highs from Monday should clear the market to go much higher at this point. It would take a breaking south of the $1,600 level in order to think of selling.