Richard Perry
Independent Analyst
Gold
We were turning more cautious on the gold bull run yesterday as technical studies (RSI and Bollinger Bands) point to overstretched conditions. The reaction into the close yesterday poses a lot of questions now. Losing -$15 from the day high of $1580 the market has formed a highly questionable positive close. A small positive candlestick body after a failed run higher leaves the market in a tricky position. There is a gap still open at $1553 which needs to be filled, but a closing of the gap could trigger some deeper retracement of the bull run. Today’s early move hints of consolidation. After such a strong run higher, the market is unlikely to now simply hover. A loss of traction significantly increases the potential for a profit-taking near term corrective move. The hourly chart shows the 21 hour moving average now taking on a basis of support (currently around $1559). The bulls need to continue their run higher to prevent a slide back. Given the initial bounce off $1555 this morning, a failure under a near term pivot at $1570 followed by a breach of $1555 would be a negative signal. A close under $1553 opens $1540.
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