Commodities
Diamond Rated - Best Financial Markets Analysis ArticleGold - For the week gold gained $14.10 (+1.50%) to close at $951.50 (continuous contract). This was the highest weekly close in the last seven weeks, so it is a positive development, especially if it holds.The daily chart below shows gold approaching overhead resistance, as represented by the late March high, which is marked by the upper white horizontal line on the chart.
Two important things to notice: higher lows have occurred; but so far higher highs have not occurred. For a bull market to obtain – higher highs must eventually develop. As long as the higher lows hold, all is well. Lower lows would call into question the validity of the gold bull market thesis.
It is my opinion that we are in a secular bull market of huge proportions and that gold will make higher highs before the New Year arrives, as the second chart that follows suggests.
Below is the weekly gold chart. Evidence the head & shoulders formation at the right hand side of the chart.Until neckline resistance at the $1000 price level is broken above on expanding volume, AND holds; the formation is only potential, not reality.
IF (?) it is confirmed, the upside target is $1300 ($1000 minus $700 = 300 - $1000 plus $300 = $1300). It could be less; or more, but at that point gold would be overbought; however, the stock market has been showing just how long overbought can obtain and get even more overbought. It is a lesson well worth remembering.
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