In May and June, gold fell by approximately 8% from its peak as bonds sold off and higher interest rates started to bite. As I explained in my last update, gold’s spring sell-off caused it to break down from a channel pattern that had formed since the fall of 2022. A channel break-down is usually a sign of further weakness ahead unless it is negated by a break back into the channel.
At the moment, gold is attempting to re-test the lower portion of the channel. If gold can break back above, then that is a bullish sign. If gold bumps its head at the channel, however, then that would be another sign of weakness. It is also important to keep an eye on the $2,000 to $2,100 resistance zone that is just overhead. If gold can close above that zone in a convincing manner with high volume, then that would be a very bullish sign.
The weekly gold chart makes it easier to see the importance of the $2,000 to $2,100 resistance zone that’s overhead:
The monthly chart of gold shows that it is still in a long-term uptrend because it is above the uptrend line that began in the early-2000s:
For now, it is important to see whether gold can negate its channel breakdown and if it can finally close above the $2,000 to $2,100 resistance zone. Regardless of shorter-term moves, I am quite bullish on gold in the longer-term due to the global economy’s hopeless debt addiction that guarantees that more monetary stimulus (aka “money printing”) is ahead every time the economy stumbles.
Please add me on Twitter and LinkedIn to follow my updates and economic commentary.
Read the full article here
