Of all the markets and instruments that I comment on and write about, none attracts more strongly differing opinions than gold. Indeed I only have to refer back to my last analysis on gold, in which I dared to suggest that the bullish tone for the precious metal looked set to continue, and here is my closing sentence from the article. This prompted the usual divergence of opinion with strong views on both side, but all I can say is that this is my opinion, and it takes two opinions to make a market.
Should this level hold, as expected, then the current bullish momentum for gold looks set to continue further and any clearance of the $1350 region will set the precious metal well on the way to take out the November high of $1360 per ounce in due course.
Since then, gold has been in an extended phase of sideways congestion in the $1320 to $1350 per ounce region where it has remained since late February as gold bulls nervously awaited the next phase. Well the wait is finally over today with gold surging higher through the resistance level at $1352 per ounce on the daily chart, and currently trading at $1367.40 per ounce for the June contract, having gained over $17 per ounce on the day. Moving to the associated volumes both below and on the histogram to the right, these confirm the bullish picture for gold.
First volume have been rising with rising prices, always a strong validating signal, and confirmed in today’s price action. Second the volume at price histogram confirms the price congestion phase created over the last few weeks, but also displays the strong level of support now in place, as we look towards the next logical target which is $1410 per ounce. Continued US dollar weakness is also helping to ease the metal higher, and with China adding to the mix with copper selling off sharply and breaking through some key technical levels, gold is currently benefitting from a variety of market forces. The short term outlook for gold (in my humble opinion at any rate)remains firmly bullish, until I am told otherwise, which I probably will!