Gold has been heading towards its longer termed target of 1300-1350—noted about a year ago on this blog. This target is derived from technical resistance that held steady during much of 2013 and a longer termed downtrend line drawn from 2011. A crack of that zone to the upside would be favorable for longer termed upside to the metal. Time will tell if that occurs, but traders will certainly be aware of the risk potential as/if/when gold reaches this target.
Neartermed potential is a little shaky at this point. Gold is bouncing off of $1220 on the daily chart. RSI and stochastics – the shorter termed momentum oscillators that I watch – are low but have not hooked up yet. MACD—a longer termed indicator, is trending lower. More ominous is the trend towards falling moneyflow (Accum/Dist line, bottom pane). That, along with a flat to neartermed declining Comparative Relative Strength line (Gold vs. S&P500) may be reasons to wonder if gold may be stagnant or short termed bearish in the coming weeks.
We hold a minor position in gold (3% of the portfolio). Seasonality picks up later in the summer for the metal – perhaps then will be a better time to consider adding to a gold position if you are watching this trade.
Keith on BNN Monday May 30, 1:00pm
I’m doing the afternoon show next Monday May 30th from 1:00PM – 2:00PM. Call in with questions during the show’s live taping between 1:00 and 2:00 pm. The toll free number for questions is 1 855 326 6266.
You can also email questions ahead of time to [email protected] – it’s important that you specify they are for me.