Gold Remains Range-Bound
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The search for direction continues in gold as the metal stays in a range between $1,305 and $1,328. The precious metal is still preparing to make a big move, and the inability to break out over $1,330 on a weekly chart suggests that prices will be headed lower before they go higher.
This consolidation pattern can last for an extended period of time and although a big move is coming, it’s not imminent. Consolidation is the period that markets spend about 65% of the time in and are the time of most uncertainty. The consolidation period consists of the weak hands and strong hands continually changing places, which keeps that market in a trading range.
In the case of gold, the longer the consolidation lasts, the bigger the next move will be. We believe the next move is lower and gold should test the recent lows. Since markets don’t announce themselves, the best way to trade this pattern is to sell at the top end of the range and be prepared to cover at the bottom of the range.