It’s not been an easy time for gold bugs who are, once again, running out of hope that the precious metal will ever show any signs of a sustained recovery, and I’m afraid to say the current technical picture on the daily gold chart does not bode well in the short term. Much as expected, and indeed as I suggested, the rally for gold from the mid October low up to the $1360 per ounce region was indeed short lived. Since then the metal has continued its inexorable move lower, punctuated by pause points, or weak attempts to regain its bullish mojo. Indeed, we saw one of these rallies last week with rising volume on Thursday beneath a narrow spread up candle, and confirming this weakness yet again. This weakness which was duly validated in yesterday’s gold trading session with the December contract closing at $1272 per ounce. The issue now for gold is that the precious metal is now approaching a defining moment for its longer term outlook with the support platform at $1260 per ounce now within sight. The importance of this price level cannot be underestimated, and should it be breached (which now seems increasingly likely), the medium and longer term outlook for gold will be bleak. An immediate consequence of such a breach could see the metal fall by $100 per ounce in early 2014. The volume at price histogram confirms the current bearish picture with a very deep area of congestion now in place at the $1300 to $1320 per ounce region. Finally, of course with the recent reconnect between commodities and the US dollar is also weighing heavily on gold. So, not a happy picture for gold bulls at present. By Anna Coulling
Leave a Reply