Well hello goldbugs. I’m sure now there is a smile on most of your faces after gold finally broke out of the $1600 trading range where it had been stuck for the best part of several months drifting listlessly in the ‘Precious Metal Doldrums’. Whether it was the fervour of Indian Independence Day or some nefarious Central Bank dealings, 15th August will be duly noted as the day the trade winds got behind gold and set a course for the $1800 barrier. 14 days is all it took to fly through the $1700 mark and onwards to $1770 where it has now paused. Wednesday 19th September’s candlestick was a Doji(D) which is generally understood to mean that there is indecision among traders as to the direction price will take. This clearly was the case as the action over the following days was quite up and down.
Firstly a Hanging Man(HM) was posted in which price dropped but then clawed its way back up to close at the day’s open. The following day, September 21st, gold surged upwards in a Shooting Star(SS) motion but was forced back down by close to once again be held at the $1775 mark.
So what does it all mean? Well gold is clearly being tested and a pullback as indicated by waning momentum on the Daily MACD chart may yet be on the cards before gold can attack this level once more.
But don’t count on it. A quick reversal is still quite possible as it has happened many times in the past and caught many a ‘shorts’ unaware. Long term momentum is still upwards so tread carefully.