Gold Price Analysis

Technically gold is still in a long term uptrend. This is true despite the fact that the high of 1033.90 on February 20, 2008 has not yet been exceeded. Near term, however, say for the month of August 2009, the outlook is not so bullish. In February 2009 there was a test of the 2008 high. The market rejected the attempt but the resulting decline was relatively modest in US dollar terms. Another attempt to test the high may be underway at this time but the attempt appears to be struggling.

Bullish factors – Gold closed higher on the monthly chart during 2009 than in 2008, but with a lower high. The monthly close in May was the highest is modern history, but without a higher high. The persistent uptrend that began in 1999 has already had a correction of almost 50%. The move up from October 24/08 to February 20/09 was strong.

Bearish Factors – Recent fluctuations in value have been corrective rather than trending. The 7 month old rising trend line has been broken to the downside. Third failure to reach a new high will have bearish implications.


Daily Gold chart as at 30 July 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Most popular indicators on monthly and weekly charts are in positive territory, but with low momentum.

MACD – flat at 50

NextView RSI – at 50 level

Stochastic – declining from Over Bought.

SMA 200 – at 880., rising slightly

EMA20 – flat, above current price

TL1- seven month old trend line, which has been penetrated to the downside and is now being tested.

TL2 – five month declining trendline.

R1 – resistance level at 966.70 R2 – 1007.70

S1 – Nearby support at 904.80 S2 - 865.60 S3- 806. (not shown on chart)

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.