Price of GOLD should continue to rise

It is no surprise that gold has been rising for the last few days, not merely because of current world economic conditions, or economic uncertainty in the U.S. – but because gold had corrected down to a powerful support level that we discussed a few weeks ago in this column.

What next? There is little doubt that the next major target is to the upside around 1,032, with additional potential to $1,215., and higher.

For the coming week, gold should continue to rise in value, but it won’t be a straight line to the top. Two significant levels of resistance have already been broken by the strong upsurge that occurred on Wednesday, Sept. 17th, a one day move of over $92. The market is falling slightly as I write, to test the previous main resistance around $843.

This level of $843. could be broken to the downside but there is now significant support between 832 – 800. Look for at least a day or so of correction before the market moves up to the next level around $918.


Daily Gold price chart as at 18 September 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI and MACD – positive divergence last week on both of these indicators implied that an upmove in the market could be expected.

200 Moving Average – currently providing resistance in the same area as the 50% level of the correction that occurred from March 17th to Sept. 11th/08 (from the high of 1032.50 down to 736.).

R1 – resistance at the 50% level.
R2 – 918.
S1 – a support zone from 843 – 792.
S2 – key support at 736.

Commentary and analysis by Don Schellenberg