Gold retested $1350 in overnight trading, extending this current move more than $84 in the last couple of months. The chart above is admittedly busier than I generally like, but so much is happening technically with the gold price.
Gold successfully retested falling support from the 2011 peak (red line) at $1180 in late-2018. This coincided with a successful retest of rising support from the 2015 low. Gold is now meeting resistance from prior peaks between 1350-1370 during every attempt over the last 6 years to break out. (more…)
The precious metals sector has continued the momentum it closed with in May. Gold and silver, in particular have been surging this first trading day in June. Let’s take a look at the technicals.
Gold has moved from a bottom at 1167 last July to a peak at 1350 in February. Beginning in February, volatility began narrowing and gold has been mired in a falling wedge pattern. According to Bulkowski (2010), 92% of falling wedge patterns break to the upside, and of those that break, 90% reach the upside target which is measured as the distance from the breakout move to peak, added to the recent breakout. I see the original break as $1238, so in this case, that would set an upside objective at $1400-$1420. (more…)
During this past week ending May 31st, 2019, oil sold off sharply, closing the week down almost $6 to $53.37, while gold rallied to close the week at $1305.50. I like to monitor the price of oil in gold terms, and to do that I use 100 barrels of oil as the numerator and the price of one ounce of gold as the denominator.
This ratio has been in a downtrend channel for a decade, with a countertrend move beginning in 2016 and failing recently during the oil sell-off last fall, which led to the breakdown of the blue channel. Oil has since tried to retest that support line through the first part of this year, but failed the retest last week. This failure is bearish, meaning that it indicates a lower ratio going forward, which should be strong for gold and weak for oil.
Following weeks of low volatility, where the CBOE Gold Volatility Index fell to a decade low of 8.75, gold rallied $15 per ounce today to close at $1284. Simultaneously, the US dollar broke above heavy resistance (briefly) at 98. As the dollar goes, so go the metals.
Gold has been forming a long, rounded bottom since 2013, and the chart looks constructive. The bull case for gold technically is that the price has remained above the 200 day moving average for the entirety of 2019, and the 200 DMA is now turning up. Gold also pushed into overbought territory on the Relative Strength Index (RSI) earlier this year, and as not oversold, which indicates that gold still has positive momentum. (more…)
