Thursday, August 15, 2013
Gold Breaks Free From its Range Trade
The metal has been knocking on the door at the top of the range trade/consolidation for some time now but has been unable to break through. Today it did so in a very big way.
Note the change in the indicator which I have posted previously on the metal. Positive Directional Movement, or + DI, has now bullishly crossed above the Negative Directional Movement line for the first time since NOVEMBER of last year!
Also, both of the shorter dated moving averages have completed upside bullish crossovers of the 50 day moving average.
Lastly, the move off the low is not yet at 20% so we can not officially state that gold has entered bull market territory as silver has done, but the chart is significantly improved and looks quite strong at the moment. A change of handles from "13" to "14" would be very significant as it would signal that WESTERN INVESTMENT INTEREST in gold has returned.
Thus far it has been very strong Asian demand for the metal that has kept it supported. That has provided the solid floor of support that we have been seeing of late. What is necessary to drive it higher however is that investment demand which is not as price sensitive as the physical markets over in Asia are.
One more thing - the seasonal tendency is now firmly on the side of the bulls as the bears have run out of time. Generally speaking the latter part of August into October is strong for gold prices as the festival season buying commences. Combine that with a renewed investor interest in the metal ( based on what I am seeing in the ETF) and the bears are going to have to look around to find some recruits for their side in a real hurry.
Note the change in the indicator which I have posted previously on the metal. Positive Directional Movement, or + DI, has now bullishly crossed above the Negative Directional Movement line for the first time since NOVEMBER of last year!
Also, both of the shorter dated moving averages have completed upside bullish crossovers of the 50 day moving average.
Lastly, the move off the low is not yet at 20% so we can not officially state that gold has entered bull market territory as silver has done, but the chart is significantly improved and looks quite strong at the moment. A change of handles from "13" to "14" would be very significant as it would signal that WESTERN INVESTMENT INTEREST in gold has returned.
Thus far it has been very strong Asian demand for the metal that has kept it supported. That has provided the solid floor of support that we have been seeing of late. What is necessary to drive it higher however is that investment demand which is not as price sensitive as the physical markets over in Asia are.
One more thing - the seasonal tendency is now firmly on the side of the bulls as the bears have run out of time. Generally speaking the latter part of August into October is strong for gold prices as the festival season buying commences. Combine that with a renewed investor interest in the metal ( based on what I am seeing in the ETF) and the bears are going to have to look around to find some recruits for their side in a real hurry.
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