Monday April 05, 2010

Gold price as a damped spring

It looks like gold prices have been behaving like a dampened spring in the past 4 months :

The trading range is between 1100-1150 give or take $15 or so. So what does this mean for prices going forward? From a technical point of view, this could fit a symmetric triangle. Which means that bull/bear factors have been fighting it out and will come to a conclusion when there is a clear breakout from the triangle, *in either direction*. For the medium term of 2-3 months, since there is no clear direction under both technical analysis and trend following rules, the best thing to do right now is to let the pattern play out and see if a new trend establishes itself. The 50-dma is also flattening out, though the longer-term 200-dma is still in an up-trend.

We are certainly living in interesting times with regards to the gold price. Watch for a possible Death Cross if a downside breakout occurs. Conversely, look out for another record-breaking run above 1200 to possibly 1300 area if an upside breakout occurs.

Recommendation for the moment : neutral on all gold trading vehicles including ETF's, ETN's, futures and spot.

See also :

1. Live spot gold price quotes chart on COMEX
2. Real-time live gold and silver price quotes chart on COMEX
3. NYMEX crude oil prices hit $80, gold prices trade near $1070.80 record high
4. COMEX gold futures trading over $1152 as prices hit new record highs

(2010-04-05 21:57:48 SGT) [Biz] Permalink

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