It’s been an interesting and encouraging few days for gold bugs as the precious metal, aided and abetted by the SNB, has finally found some much needed positive momentum and a more sustained recovery from the dismal performance of 2014. However, the current move higher has some interesting facets both technically and fundamentally, and if we start with the fundamental picture, it is interesting to see gold and the US dollar rising in tandem, something which rarely occurs, and generally only during moments of crisis. The last time we saw such as move was at the peak of the euro crisis as safe haven flows sought out the US dollar, gold and ironically the Swiss Franc, which once again is playing it’s part in the current recovery for gold, albeit in a slightly different way!
Last week’s shock market news has also helped to propel gold through some key technical levels, which I outlined in my analysis last week, with the first of these breached on the daily chart in yesterday’s trading session, as the market closed with a wide spread up candle on good volume above the deep resistance level at $1282 per ounce area. This is denoted with the accumulation and distribution indicator with the blue dotted line.
With this region now breached, and moving to the weekly chart, the next deep area now awaits in the $1350 per ounce region, where the current rally for gold may run out of steam. As I suggested last week, longer term I remain bearish on gold and this level may prove to be a bridge too far for the current recovery. For gold bugs and longer term investors holding gold, the price action of the past week has been great news, and for speculative traders the strong moves coupled with volatility have yielded some great trading opportunities intraday. Indeed, we can see this rise clearly in volatility since the SNB’s decision on the CBOE GVZ chart with the YTD chart moving from 18.41 to stand currently at 23.43. However, in the longer term I remain bearish and would not be buying gold as a long term investment just yet, unless of course the SNB have further ideas!
By Anna Coulling
But Anna, when I look at my weekly gold chart I see extreme high volume between 24th October and now. On the other hand, the GLD weekly chart doesn’t show anything unusual in volume. I don’t know which is correct – one is tick volume the other is shares of an ETF. According to the Wyckoff method, high volume at a low would denote buying climax. But which volume readout is correct?
Kind Regards
Vince