Technical Analysis - Gold

Wednesday, June 26, 2013, Marketing Communication Gold, Monthly The monthly chart details how the gold price has performed over the past 15 years, posting the widely publicised sharp gains from 2001 to the highs in 2011 at $1,921. The price accelerated higher following QE in 2008. This accelerated trend was breached in 2011. Price action is still well above the longer term bullish trend, lower red line, on this semi-log chart, this longer term trend is currently down around 1115. As a result gold has room to fall further while remaining in the positive long term trend. Gold, Weekly On the weekly chart we draw retracement lines on the 2008 lows to the 2011 highs. These are drawn to illustrate how the price has now fallen under the 50% level at 1301, this does now open up the lower 61.8% level at 1155. In order to turn technically bullish the gold price will now need to breach the 38.2% level at $1,448. Gold, Daily The Daily chart details the recent break down in more detail. Price action has been in a bear trend from late 2012. Following the sharp break in major support in April gold moved into a consolidating congestion phase, black lines. The selling has continued in recent days and price action has broken lower. Pattern followers would call this a pennant formation, and this is forecasting moves down to 1160, the height of the move in the pennant, projected lower from the break. This level is coinciding with $1,155 given by the weekly retracement level detailed above, as a result there would appear to be a vacuum on gold price in the near term. Gold bugs would not be advised to attempt to buy the market until clearer support levels are breached, or until robust basing action is witnessed. Leaving a negative near term outlook on gold, expecting the market to be pulled down to major support around $1,155-1,160. 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