From today's Gartman Letter...... (10-19)

"Regarding gold, the market continues to correct its rather overbought condition of a week or two ago by essentially moving sideways. There is strong psychological resistance thus far at the $1050-1060 level that has proved quite formidable, but perhaps more importantly there has been strong resistance at the £675-680 level (and correlatively at the €700-720 level) that has kept the gold market in check.

Note then the chart this page of gold in Sterling terms in four hour periods going back into mid-August of this year. The trend is well established, moving from the lower left to the upper right, always making higher highs and higher lows along the way. Friday’s low at or near £640 was hard upon the trend line and as we write spot gold is trading £648.85. We know now where our “defense” point… our stop… shall be on this trade. A movement downward through £640 for an hour or so would force us to the sidelines.

Saturday was the Diwali holiday in India, and as everyone should know that is the most “gold” related holiday of the year in India, which remains the world’s largest buyer of gold. Thus, gold sales going into and during Diwali are hugely important for gold off take. Going into this year’s holiday it was widely understood that sales were very weak relative to past years, but it shall take some time before we know for certain that that is true. However, judging from the figures last week from the gold trading associations in India this year’s Diwali was clearly the worst of the past several. We will find out how much worse in the course of the next week or so.