Last week was a significant one for gold and one which will have cheered gold bugs who might be cautiously optimistic when considering the daily chart for the precious metal and it’s not hard to see why.
First, and perhaps most significant, we have a well-defined double bottom in place at $1,680 per ounce and confirmed with the platform of support generated off the accumulation and distribution indicator with the blue dashed line.
Second, we finally saw the resistance above $1,740 per ounce taken out with confidence, with Thursday and Friday injecting the desired momentum on good volume as the price moved away from the volume point of control at $1,730 per ounce. This bullish momentum has continued in early trading today with gold currently trading at $1,789.2 per ounce and helped further by some weakness in the U.S. dollar. The question now is how this bullish trend is likely to unfold and to answer this we need to look no further than the VPOC histogram itself.
Here we have relatively low volume ahead and which extends through to $1,830 per ounce where it starts to build once more, with price-based resistance of the red dashed line coming into play at $1,872 per ounce. So the move over this $1,820 per ounce region is likely to be more labored. But once clear of both volume and price based resistance, it’s an open road for gold on to $1,980 towards the top of the chart in this timeframe, and a cheering time for gold bugs as we eye the $2,000 per ounce level once more. And always remember, if gold is developing a bullish trend, which I believe it is, silver will almost certainly follow and I’ll take a closer look at the technical picture for that one next time.