Gold Update

Gold continues to move up with strength. After a $10.20 gain on Friday, we are trading up $6 /oz at noon on Monday. That puts us at $690 /oz. The next major resistance is $692.50 which was the February high before the market correction. Here is a graph, and I would like to talk about some technicals for gold and the near future actions that could possibly ensue.

This is a nice graph. You can see that the RSI and STO is trading at its top end. This signals that gold is over bought at this point, but you can also notice that gold has a habit at trading near the top ends for a while before correcting down. If you look at the STO, you can see a great example of how it traded in and around the 80 line for a while before correcting.

So this bring us to a couple of possible scenarios for gold.

The first is that gold corrects back down to its 50 day MA at around $660 /oz. This would be fine with me. A little correction and some sideways trading just means that the yellow metal can form a stronger base for its next up leg.

The next scenario, which I find more likely, is that we break through this $692.50 barrier and push past last years May high. As the upward trend line shows, resistance after $692.50 is upwards of $720. I believe this scenario is more likely, but I wouldn't count the first scenario out of the question.

If we bust this resistance, look for a new high in gold, and then a correction back to the $692.50 barrier.

If you read my blog you know that it is all trivial to me. In the long run, I see gold hitting $3000+ /oz. We won't even notice these corrections and breakout if you look at a long run chart in a couple of years. I like to dabble in the technical analysis, because I find it interesting and challenging. Otherwise, I'm long my positions.