Gold Breaks to the Upside Resulting in Major Price Gains
Up Up and away, would you like to fly in my beautiful balloon
The lyrics to this song, written by Jimmy Webb and sung by the Fifth Dimension in 1967, seem to be appropriate to convey today’s upside breakout in gold pricing. Categorized as sunshine pop, this song won the record of the year during the 10th annual Grammy awards in 1968.
This classic pop song became a standard which conveyed optimism and the ability to soar to new heights. In much the same way, recent price action in gold has had a substantial effect in changing the neutral and bearish sentiment that existed with gold traders and investors in the middle of December as the market traded to a low of $1238 per ounce. Without a question of a doubt, current market sentiment towards the precious yellow metal is bullish.
This rally began after an extended and defined corrective period resulting in gold selling off to $1238 an ounce on December 12 of last year. That price point becomes a launching pad with the momentum to carry prices substantially higher over the next three trading weeks.
By January 2, the first trading day of this New Year, gold pricing had moved off of those lows and broke above $1300 per ounce for the first time since October of last year. The following week would carry gold prices even higher culminating in 11 consecutive daily gains, breaking the previous record of 10 consecutive daily gains which occurred in July 2011.
It would not be until Thursday of last week that gold prices had the highest closing value for the calendar year when it closed at $1322 per ounce. Immediately following that move, gold prices began to soften and consolidate with real resistance at $1324 and defined support at $1306.
On Wednesday, gold prices began trading just above those lows, and for the first time in four trading days resulted in a gain on the day. Thursday’s trading would take pricing higher, and it attempted to retest resistance at $1324. This attempt was unsuccessful, and even though the market gained just under five dollars in value, traders were unable to move pricing effectively above that area of resistance.
That all changed today when gold prices opened just above yesterday’s previous close. Today’s trading activity resulted in a dramatic release of energy which was created as a byproduct of the tight and narrow trading range due to market consolidation. This produced a release of energy which literally moved gold pricing up up and away.
Wishing you as always, good trading,