Via Energy and

Gold is ripping higher this morning amid heightened fears of global deflationary pressures and a slew of central bank rate cuts (Norway, Taiwan, etc.):



This morning’s move higher is highly significant because price decisively broke above last week’s resistance level ($1141) and buyers have not showed any signs of lack of conviction. The next major area of resistance comes in around $1170 (8/24 panic high).

Last week we highlighted the constructive futures positioning and posited that reversion to the mean in gold futures positioning would lead to a rally up to at least the $1180-$1200 area over the coming weeks. This appears to be playing out now. Support near $1117-$1120 held perfectly over the last couple of days and it certainly looks like the next leg of the rally which began in early August is underway.