In the run-up to the all pervasive US elections, gold has been trading flat.
The most recent top came at the $1800 resistance early October after which short-term upwards momentum expended itself resulting in a healthy pullback to the $1710 area. It is in this area that gold seems to be waiting out the results of the mighty nation’s electorate.
Przemyslaw Radomski, founder of SunshineProfits.com wrote earlier this week that “the theory goes that Romney will replace Fed Chairman Ben Bernanke whose current term will expire in any case on January 2014. This might slow down the perpetual money printing machine, which would be a bearish signal for gold.”
But lets bear in mind that Romney has diclosed that he himself owns between $250,000 and $500,000 of gold.
On the other hand, if Obama wins, Radomski reckons we will likely see a quick rally in the precious metals in the short term. Ultimately it does not matter who occupies the White House this January. Deficit spending and money printing is set to continue as there are no quick fixes to the troubled US economy. The long-term picture for gold and silver will remain bullish in either case.
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.