“There have now been four re-tests of the zone in 2018 alone”
As we say in the technical analysis game, there is a lot of resistance at $1,360.
Here’s a chart of gold over the last five years.
(By the way, you may notice I’m trying out some new charting software this week – thanks to the guys at Sharescope – and I haven’t quite got on top of it yet, but I’m getting there.)
The two red lines mark the $1,355 to $1,370 area. You can see that, with every attempt since 2014, gold has come down off this level like a balrog in flames.
What is promising about the most recent price action is the fact that the retreat has not been so pronounced. Whereas in 2014 or 2016 the attempts at this level met with sell-offs of $200 or more, the 2017 retreat was “only” $100 or so, but the 2018 pull-backs have been more like $50 and much shorter-lived. Higher lows, in other words.
There have now been four re-tests of the zone in 2018 alone. “The more times a level is tested, the less likely it is to hold”, you will have heard me say many times on these pages. I can’t help thinking that $1,360’s resolve at gold’s Bridge of Khazad-dûm is weakening.
And once we’re through that, I can’t help thinking there should be fairly safe passage through to the mid- to high $1,400s – albeit with a couple of wobbles along the way.
Here’s another good omen for gold
The astute among you might point to the fact that gold’s strength has been as much about US dollar weakness as anything. Against sterling for example, which has been strong, gold is flat, indeed it’s down a few percent compared to where it was after the Brexit vote.
This is true, but then I see your sterling, and raise it bonds and stocks.
It’s early days, so don’t reach for the champagne just yet. But we are starting to see gold outperform both stocks and bonds. It’s been a long time since we have been able to say that – early 2016 aside. If you measure bonds by the iShares Barclays 20+ Treasury Bond exchange-traded fund, (NYSE: TLT), then gold has actually broken out to three-year highs.
Against stocks, the story is less convincing. But over the past couple of weeks, gold has outshone the major stock indices, especially the FTSE 100, which has been awful.
https://www.zerohedge.com/news/2018-03-30/stars-are-slowly-aligning-gold-frisby
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