For gold it was a good day yesterday!

They say a week in politics is a long time – well in the financial markets one could apply the same principle to the events of the last 24 hours which triggered a cataclysmic event as markets were rocked by the Swiss National Bank. The shock waves from this decision are still reverberating around the markets with brokers collapsing and client accounts in turmoil. Havoc and mayhem created by one central bank.

However, whilst many were either wringing their hands in despair, or grateful to have avoided the tsunami of volatility, for one group in particular it was a good news story yesterday, and that group was of course gold bugs, who saw their beloved metal surge higher on the day closing with a wide spread up candle and gaining over $30 per ounce to end the session at $1264.80. A wonderful day for both investors and traders, and reminiscent of another Swiss related move back in December last year ahead of the referendum. On this occasion, the rally petered out in the deep area of price congestion in the $1235 per ounce region, with the price of gold then retracing to test the platform of support in the $1175 per ounce area. Yesterdays news duly provided the catalyst to finally breach this region, and breakout in style, with the high volume confirming this as a valid move higher.

The question now is where next for gold in the short, medium and longer term, and for a view we need to turn to the weekly and monthly charts. As we can see, yesterday’s price action on the daily chart has propelled gold higher and away from the congestion phase of the last few months, and now looks set to test the deep resistance overhead in the $1270 per ounce area and as shown with the red dotted line. What is perhaps most revealing about this timeframe is the lack of any buying climax, and whilst gold prices have recovered from the lows of late October and early November, there is nothing to suggest a climactic recovery or reversal of the longer term trend at present. Indeed the $1270 per ounce area may well prove to be an immovable barrier in due course. Whilst there has been a modicum of buying over the last few weeks, and supporting the move higher, for any reversal in the longer term bearish trend, volumes would need to be substantially higher and reflective of big operator buying at this level, something which is missing at present.

Moving to the monthly chart, this paints a similar picture with the deep platform of support in the $1170 per ounce area extremely well defined, and holding firm for the time being, with gold pushing higher in the short-term. On this timeframe the next deep level of resistance is in the $1350 per ounce area where the price of gold stalled in 2014. If the $1270 per ounce level is breached on the weekly chart, then we may indeed see gold test this level once more with a possible repeat of the price action of 2014.

In summary, and from a longer term investing perspective, I still remain bearish on gold, and whilst yesterday’s price action provided wonderful intra day trading opportunities and was very welcome news for gold bugs, I believe the metal will continue to move lower longer term. And my reasons – primarily the lack of any clear buying climax in the longer term timeframes, the prospect of further sustained US dollar strength this year, and the lack of any significant inflation in the economies of the world. Whilst gold will continue to attract safe haven flows on extreme days such as yesterday, longer term I believe the outlook remains weak for the metal.

By Anna Coulling