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Gold’s Daily High Matches the Lows of November 2011

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For the first time since November 2011 and May 2012 gold pricing has matched the lows achieved during those months. Looking at a monthly chart we can see that this current rally has taken gold pricing to the highest trading point since April 2013. However, it must be noted that during that month gold broke below the support level achieved over the prior two years at approximately $1522 per ounce. That price low occurred on two occasions as seen on a monthly chart. In September 2011, exactly one month after hitting the highest price on record for gold which was just above $1900, gold traded to a monthly low of approximately $1535 per ounce.

This signaled the beginning of gold trading in a defined range with strong support just above $1500, and strong resistance at just about $1800 per ounce. In fact, gold would test the resolve of the lows just above $1500 on two occasions as it oscillated between $1800 and $1500 per ounce. In April 2013 that all changed. That month gold opened at $1598 at the beginning of the month and traded to a low of $1325 before settling at $1473 at the end of the month. This was the first instance of gold breaking below the strong support level at around $1500.

Following that move gold would trade lower for the remainder of 2013, through 2014, up until the end of 2015 when it hit the low of $1040 in November of that year. That low marked the conclusion of a multiyear correction which had been in play since the beginning of 2012.

By the beginning of 2016 gold prices recovered and traded to a high of $1380 in July and August of that year. The price point at the high of 2016 would become the new level of major resistance. Market forces would test that price point on multiple occasions throughout 2017 as well as 2018. However, the price point of $1380 would continue to be a level of resistance that would not be breached until this year. In June of this year gold opened at approximately $1319 per ounce and closed for the first time since April 2013 above $1400. Last month gold opened just below $1400 per ounce and gained approximately $39 on the month and after hitting an intra-month high of $1443 closed at $1437. On August 1 gold opened at approximately $1425 and has now gained about $100 with gold futures basis the most active contract settling today at $1522.30.

This is the first time since April 2013 that gold has traded to the lows seen in 2011 and 2012 just above $1500 per ounce. In terms of a current price target gold is at a crossroads as a move higher will put it within the range that gold traded to immediately following prices moving above $1900 per ounce.

Our current technical indicators suggest that this rally which is the second leg of a major rally beginning at $1166 could go as high as $1560 before finding major resistance and beginning a short corrective period. Our model also indicates that once the corrective period concludes we would see gold pricing take out the highs achieved of $1560 and possibly trade as high as $1800 per ounce. This is a long-term model which looks to forecast gold pricing out to 2021.

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Wishing you as always, good trading,

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.