Yesterday was a positive one for gold, which saw the precious metal climb throughout the day before closing the session at $1,794.7 per ounce after having opened at $1,760.40 per ounce. It delivered some much-needed positive impetus for gold bugs.
In terms of the price action itself, the candle closed on a wide spread body with minor wicks top and bottom and, more importantly, on high volume. Therefore, effort and result are in agreement here if we consider some of the benchmark candles from last month – and in particular that from Sept. 30th. This confirms the genuine nature of the move. The question now is: Where next for the price of gold? A question that is easy to answer from a technical perspective.
First, and immediately ahead, is the volume point of control denoted with the yellow dashed line at $1,810 per ounce. It is likely to be the first stopping point in any continuation of the current move higher. Once the VPOC is achieved, we can expect to see congestion develop at this level. This could extend for some time, given the extent of volume on the VPOC histogram. However, this is not the most significant level on the daily chart.
That particular honor falls at $1,840 per ounce. This level is pivotal and, in my opinion, will define the longer-term price action as one that has seen three previous bullish moves fail in the last few months. If it is breached in due course, then gold will be set for a longer-term bullish trend through $1,920 per ounce and on towards a test of the all-time high. This is what I expect to see with rapidly rising inflation driving investors back into the precious metal. But patience will be required.
First, we have to break free from the VPOC on good volume, followed by a breach of $1,840 per ounce.