Gold put in another solid performance with the precious metal moving higher and continuing to extend the bullish trend which saw it climb through the $1900 per ounce price point as forecast in previous posts with a couple of key days to note last week. The first of these was on Tuesday when, following a quiet start, the price closed up over $17 per ounce on the day ending the session at $1900.50 per ounce and the first touch of this psychological level. Wednesday and Thursday saw some consolidation and indecision at this level, before the second important day’s trading arrived on Friday with the move lower firmly rejected with the buyers stepping in again returning the price above the $1900 per ounce level on good volume. The shortened trading week has opened with a gap up as bullish sentiment continues to remain strong.
So where next for gold, and to answer that question we need to turn to the monthly chart. April and May closed on a rising price and associated with rising volume, a positive sign, and the key levels are now dictated more by the VPOC histogram rather than price-based resistance. As we can see the volume falls away as we move towards $1950 per ounce and beyond and at $2050 where we have a low volume node. As always, the effort required to move higher correlates positively with the depth of volume-based resistance on the histogram to the right of the chart, so as volume falls here, so too does the volume (effort) required to drive the price higher. The key fundamental driver, of course, is inflation and with a variety of signals suggesting this is rising, the outlook for gold remains bullish with the potential to move beyond $2100. But let’s not get carried away! But first, we need to test and break through the $1950 per ounce area and thereafter we have the psychological $2000 level as well as the volume resistance at $2050. So some interesting times ahead for the precious metal.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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