Today gold has been moving quickly higher, visibly above the $1,600 level. In the previous Premium Update we wrote the following:

"(…) only a confirmed breakout above the $1, 603 level will change our sentiment to bullish."

and

"(…) This is just above $1,600. If gold can move above this level and confirm its move, the next target would be in the $1,800 range."

We have seen an increase in price and investors' sentiment without a confirmation from the volume. We realize that it may be difficult to believe after seeing gold moving higher since the beginning of the month, but this is what suggests that it is the general public that is buying right now, not the "smart money".

Moreover, gold stocks have actually declined today after a failed attempt to move above rising resistance line that we described in the latest Premium Update. This is a bearish signal. Also, there was no breakout visible in gold from the non-USD perspective.

Meanwhile, there was insignificant price action in USD and Euro indices and the situation remains tense.

On a side note, from our perspective, today was one of the most exhausting days in 2011 - we had a "close short / go long" alert ready before markets opened in the US and we were waiting for a confirmation to send it to you as soon as it got confirmed in the US markets - this confirmation never arrived, but it was only after the session was over when it became clear that to some extent even the opposite was the case. Namely, it was only after the end of the session that we had the volume data and we've seen that the price action in gold stocks was in fact bearish.

We're going to be in the "red alert mode" tomorrow (and in the following days) as well, as once again, a decisive move in either direction could confirm or invalidate a breakout - both of which will have profound implications going forward. So far, there are no changes in our views on the market.

Thank you.

Sincerely,

Przemyslaw Radomski