In the last 3 weeks gold has built a solid base as prices have consolidated trading on both sides of the 200 day MA; identified by the light blue line. Though futures probed the 61.8% Fibonacci level as seen on the chart above prices never settled below that critical pivot point.? Off their lows 2 weeks ago prices have already advanced over $50/ounce as of this post. ?I think if we can get a settlement above the 50% Fib level at $1675 we should be on our way to the 38.2% level just above $1700/ounce. I see the next significant resistance at the 100 day MA; identified by the red line currently at $1718.
One of the most significant feature I want to point out on the chart is that before we reach the apex in the triangle we should see prices break-out (up or down). Now this is not precise but the apex is likely in the next 30 days so stay tuned as the direction of the forthcoming breakout I anticipate should set the tone for the next leg. I am obviously in the camp that the direction of the breakout will be up. I have advised clients to gain bullish exposure in futures and options and be willing to add to the trade on the way up as the market proves you correct.
Perhaps a catalyst to propel gold and other metals moving higher could be the PPI and CPI that are reported today and tomorrow. My take is regardless of the number the metals are starting to price in inflation is inevitable based on the actions of Central Banks around the globe.