Gold bulls never just slink away they always have to look at ridiculous prices somewhere in the future. Just a few months ago, they were screaming gold will trade over $2000.00 per ounce. Just a few weeks ago it was sure bet that gold would break above $1800.00. These bulls are always talking up the markets.
Gold looks to be readying itself for another crack at the $1800 resistance level.
Gold’s pullback over the last few weeks seems to have come at a time when participants were least expecting it given the announcement of further stimulus from both the ECB and US Federal Reserve.
There is strong buying support emerging around the $1700 level. This level also coincides with the 38.2 per cent Fibonacci retracement level of the May 2012 to September 2012 rally; pullbacks often find support around this level in up trending markets.
However, what seems to have happened is that the gold market anticipated the stimulus packages and rallied strongly in advance of the announcements. This sort of price action is commonly referred to as ‘buy the rumor, sell the fact’.
So the latest pullback looks to have cleared out any weak bullish positions and now gold is showing signs of strong support.
The 20-year seasonal chart is also pointing towards a move higher. The red circle shows that gold typically experiences some sort of pullback during October, which almost directly matches what we have seen this last month. From here, it suggests gold typically continues its rally into year end.
With recent announcements from the US Federal Reserve confirming that stimulus measures are here to stay for a while yet, the supportive backdrop for precious metals and inflation hedges looks to be going nowhere.
If gold does begin to move higher, we would expect it to test recent highs around the $1796/$1800 level. From there, the all-important resistance at $1803 comes into play, with a successful breakthrough opening up a move towards all-time highs around the $1900 level.
Where do you think gold will go, oh yes perhaps one day in the distant future we may see gold in the 1900-2000 level, that would be a safe bet, the question is when and first how low will gold drop.
Gold looks to be readying itself for another crack at the $1800 resistance level.
Gold’s pullback over the last few weeks seems to have come at a time when participants were least expecting it given the announcement of further stimulus from both the ECB and US Federal Reserve.
There is strong buying support emerging around the $1700 level. This level also coincides with the 38.2 per cent Fibonacci retracement level of the May 2012 to September 2012 rally; pullbacks often find support around this level in up trending markets.
However, what seems to have happened is that the gold market anticipated the stimulus packages and rallied strongly in advance of the announcements. This sort of price action is commonly referred to as ‘buy the rumor, sell the fact’.
So the latest pullback looks to have cleared out any weak bullish positions and now gold is showing signs of strong support.
The 20-year seasonal chart is also pointing towards a move higher. The red circle shows that gold typically experiences some sort of pullback during October, which almost directly matches what we have seen this last month. From here, it suggests gold typically continues its rally into year end.
With recent announcements from the US Federal Reserve confirming that stimulus measures are here to stay for a while yet, the supportive backdrop for precious metals and inflation hedges looks to be going nowhere.
If gold does begin to move higher, we would expect it to test recent highs around the $1796/$1800 level. From there, the all-important resistance at $1803 comes into play, with a successful breakthrough opening up a move towards all-time highs around the $1900 level.
Where do you think gold will go, oh yes perhaps one day in the distant future we may see gold in the 1900-2000 level, that would be a safe bet, the question is when and first how low will gold drop.