Gold’s relative strength indicator is at the 73, highest since September 2011 – the month that gold hit an all-time high. See HERE.

This may suggest that gold is technically “overbought” justnow, but it is also at a level we saw regularly back in the early 2000’s when gold was starting a bull run with a 16% year on year increase, well before the Global Financial Crisis.

There have been a few signals that echo the early stages of that bull run – including the stealth rally in gold in non-dollar currencies, but perhaps most encouragingly is news that central bank gold buying is at the highest since 1967.

Most gold bull runs typically start slowly as it faces the headwinds from good selling by frustrated longs who see price strength as an opportunity to exit … once we are through that gold is unfettered for a faster move higher as prices go inelastic. We seem to be in that phase now.

The high RSI suggests that gold is due a temporary pause – but it also suggests to us that it is brewing for the mother of all moves higher. We just need to breach the $1360 level and we are off to the races.

Retail demand is the only sector in our view that remains relatively lacklustre … sadly the man on the street is usually late to the party … and then stays too long.

Ross Norman
CEO