This is a important week and especially Fridays economic reports. I can see a case for both Bullish and Bearish gold. Being so close to that trend line again, it would seem safe to wait before making any bets. But I am still leaning bearish. One of the reasons is because of technical, but an even bigger reason is that the dollar has been dropping hard for the last several months and gold has essentially been trading sideways. With the dollar at very over sold levels right now and at strong support, I don't think it is going to drop through yet. As a matter of fact, there is a huge bullish divergence on the weekly chart for the dollar from its May 2016 low to today. see the dollar chart
Nothing is guaranteed but that is significant. If the dollar bounces, it seems likely that gold will react quite a bit in a negative manner. Another factor is that golds volatility index is at its lowest since the 2011 gold top and much lower than the 2013 gold top. I am wondering if that means that a drop in gold like 2011 - 2012 or 2013 is on the table. And then there are the miners. These stocks have been trading with lower highs and not showing a lot of strength with the gold rallies. If you look at the Jnug chart, you can see that we had a little volume spike on July 26th. Looking back, when Jnug has had large green volume spikes, it has usually meant that we were at or near a top before a large drop. That does not mean that it will stay consistent, but is worth noting. Volume has been dropping off which means a big move is coming. And with the close of the DOW above 22,000 today, I am wondering if money might finally start flowing out of gold and into equities. Hard to tell at this point. But we are due for at least a half cycle drop in gold. And Jnug seems ready for the same thing.
On the opposite side of the argument, gold is so close to the trend line, any significant bad news or bad economic data could be the trigger for the gold breakout. So stay alert because if you are short like me and this thing takes off, then we may have to take a loss. I hope not but we shall see. GL