If there is a specific reason why spot gold is up $38 since about 7:40 a.m. ET, it has to be Chicago Fed Governor Evans spewing forth comments that the economy remains weak, and that more monetary stimulus is needed. That is all the gold bugs needed here in combination with President Obama cooking up another big stimulus plan that will spit into the wind of deficit reduction and fiscal austerity.

In any event, the vertical surge in the SPDR Gold Shares (GLD) from 174 to 178 in pre-open hours Tuesday has the look of the start of upside continuation of the rally off of last Thursday's corrective low at 165.88 to Friday's high at 178.17.

That said, the fact that this morning's strength pushed above Friday's high (to 178.36 so far) but has not followed through makes me suspicious of its underlying sustainability and warns me to wait and wait for 1-3 hours prior to jumping into a new long position into strength.

Heavy resistance resides at 180.00, so any forthcoming long position must be "supported' by an accompanying pattern that has "structural potential" to surge through and sustain above 180.00/50.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.