When I was recently looking at the gold prices chart from the perspective of the coming months, I saw minor indications that prices may break through the strong resistance around $1800 per ounce. But all major movement start with minor steps. And within the coming week we may get a first clear sign about the rising of gold prices.
If we look closer at the bullion daily price chart, we may find that starting from June prices came up to the resistance, but were never able to breakthrough. Now we have a fifth attempt that may be more successful. This resistance is at $1796-1797 per troy ounce. We may also notice that the gap between these attempts is becoming shorter as the last attempt was recorded on October 14. The line that connects lows of September 8 and September 29, and is located at $1744-1745 per ounce represents the support.
It this resistance is broken through than gold has all the chances for steep growth at the height of the consolidation range that it is now in. And the very closet price gold may reach during this rally is at $1940-1945 or 8% up. The key indicator for this rally would be a trading volume that has to rise significantly compared to the regular trading volume within the current consolidation.
It is worthy to note that the higher the closing of this week is, the more chances we may have for a reversal pattern on the weekly timeframe chart. The intermediate resistance would be at $1833-1837 per ounce, or highs of July and September.
We may have gold outperforming the U.S. stock market. But this would happen only if the inflate stock bubble collapses. For example, during the Great Depression in the 1930s and in times of high inflation during the 1970s, the ratio of gold prices to the Dow Jones index were at 1:1. Today the Dow Jones index is far above this level, at 35,600 points, or over 2000% of gold prices, and with high inflation pressure, it is logical to suggest that the model that we had in the 1970s when gold prices surged and stock market plunged may be repeated. But not only would the bullion benefit in this case, silver and other counter-inflation instrument would also rise in price.
So we may have a clear conclusion that we do not only have technical but fundamental factors for precious metals prices to rise. And it is Important not to miss the signal for the start of this rally.
If we look closer at the bullion daily price chart, we may find that starting from June prices came up to the resistance, but were never able to breakthrough. Now we have a fifth attempt that may be more successful. This resistance is at $1796-1797 per troy ounce. We may also notice that the gap between these attempts is becoming shorter as the last attempt was recorded on October 14. The line that connects lows of September 8 and September 29, and is located at $1744-1745 per ounce represents the support.
It this resistance is broken through than gold has all the chances for steep growth at the height of the consolidation range that it is now in. And the very closet price gold may reach during this rally is at $1940-1945 or 8% up. The key indicator for this rally would be a trading volume that has to rise significantly compared to the regular trading volume within the current consolidation.
It is worthy to note that the higher the closing of this week is, the more chances we may have for a reversal pattern on the weekly timeframe chart. The intermediate resistance would be at $1833-1837 per ounce, or highs of July and September.
We may have gold outperforming the U.S. stock market. But this would happen only if the inflate stock bubble collapses. For example, during the Great Depression in the 1930s and in times of high inflation during the 1970s, the ratio of gold prices to the Dow Jones index were at 1:1. Today the Dow Jones index is far above this level, at 35,600 points, or over 2000% of gold prices, and with high inflation pressure, it is logical to suggest that the model that we had in the 1970s when gold prices surged and stock market plunged may be repeated. But not only would the bullion benefit in this case, silver and other counter-inflation instrument would also rise in price.
So we may have a clear conclusion that we do not only have technical but fundamental factors for precious metals prices to rise. And it is Important not to miss the signal for the start of this rally.
