For gold bugs, it’s a question of patience and more patience as the precious metal continues to remain rangebound at the same level as the test of resistance, around the $1,830-per-ounce level, is firmly rejected. This rejection occurred several times in December. And, as we start a new trading year, this pattern is being repeated once more. The level is defined by the red dashed line of the accumulation and distribution indicator on the daily chart. It sits at $1,828 per ounce. As I have written many times before, the line thickens according to the number of times a level has been touched and held.
And as can be seen on the daily chart for gold, this level is once again taking on increased significance. But of course, even if it is breached, there is no guarantee it will hold as we saw in November, when the price rise promised much before the metal ran into heavy selling and weakness in a volatile trend higher. The resulting price waterfall accelerated the move back to the VPOC, which remains firmly anchored at $1,788 per ounce and denoted with the yellow dashed line.
So in the short term, patience is required for gold bulls. Until the $1,830 level is breached and holds we are unlikely to see any sustained upside momentum. Even then, it might be short lived, but as always such a move will be confirmed with volume and price.
On a more positive note, we have a low volume node on the VPOC, between $1,830 and $18,50 per ounce, with relatively light volume on the VPOC histogram. So progress higher will not require a huge effort to break away, which, when it comes, may be another volatile move as before.