In case you hadn’t noticed, gold is now at a critical technical level once again, closing on Friday in the spot market at $1410.10 per ounce, after a week of sideways price action at this level, as we begin to test the triple top in the $1425 per ounce area. Triple tops are one of the most important and significant technical levels for chartists for two reasons. First, a failure at this level will then create a fourth consecutive top, which is extremely bearish, whilst a break above this level is very bullish, and should we see a break out higher, which is what I am expecting, then do not be surprised to see the gold price move up very quickly in a sharp upwards move. Once clear of this region, the platform of support below will be extremely strong and as such provide a very solid barrier should we see any short term retracement.
The moving averages are all suggesting a move higher, with both the 9 and 14 day moving averages having crossed above the longer term 40 and 100 day moving averages, ansd with the 200 day moving average also sloping higher, bullish momentum is now firmly in place for the precious metal. Indeed on Thursday, we saw the low of the day test the 9 day moving average, which held firm, always a strong signal that the upwards momentum is holding firm. However, as always we need to be patient and wait for a break and hold above the $1430 per ounce region, but once clear of this area, then expect an extended bull run for gold during the remainder of this year. So the message here is very simple – wait for the price to break higher, and then buy gold, either physically, in the futures market, in an ETF or in gold stocks.