Thoughts On Gold

posted in: Charts, Gold, Gold Stocks | 0

I read a lot of stuff on a daily basis. I probably read anything that is worthwhile to read on gold and there are no shortage of opinions as to “what must happen” before the next big move in gold etc. etc. Some guys are bearish saying that gold is about to crash, some guys say we need to have one more washout sell-off before the big breakout, others say gold is going to $5,000 next month. As usual everyone’s got an opinion but the reality is are any of these opinions valuable?

Lets take a look at a 4-year chart of gold in USD terms:


Here are the facts:

  • Gold has made a series of higher lows since bottoming at $1045 in December 2015
  • Gold has consistently run into resistance above $1360, while pullbacks have found bottoms at higher levels
  • The most recent December low at $1238 now takes on added importance as a downside support level
  • Gold has a tendency to reach a Daily-RSI(14) of 30 or below during pullbacks before turning higher again. However, this doesn’t happen every time gold takes a dip and we have seen pullbacks end at an RSI of 35 or 40
  • $1300 is clearly the next downside level of significance, whereas, $1360 is the next upside level of significance (a strong move above $1360 would snap the apparent ‘double-top’ up at that level)

Those are the facts. All the other stuff you are reading is mostly made-up mumbo jumbo. Gold is generally quite constructive from a technical vantage point and it seems to me some further consolidation in the $1310-$1350 area would be healthy and set the stage for an eventual breakout move over $1360 (and eventually above $1400).

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