Gold Hits 5-Month High Friday, Finishes at Technically Bullish Weekly, Monthly High Close

By Jim Wyckoff
30 April 2010, 1:25 p.m.

Comex gold futures prices on Friday notched a fresh five-month high of $1,182.50 an ounce, basis June futures. Prices also produced a rare and technically bullish weekly and monthly high close on Friday, which is the last trading day of the week and of the month. Indeed, the gold market bulls have had a very good week.

Gold has been supported this week on fresh speculative and safe-haven buying interest from investors and traders, amid the European Union's smaller countries' debt crisis that continues to play out. Importantly, the deepening European Union debt crisis this week saw traders and investors change their perspective on gold, from one of a speculative commodity play, to a safe-haven investment during times of heightened uncertainty.

Technically, June Comex gold futures bulls have the solid overall near-term and longer-term technical advantage. Prices are in an 11-week-old uptrend on the daily bar chart. Chart resistance for June gold is located at Friday's high of $1,182.50 and then at $1,190.00. The next major upside price objective for the gold market bulls is to produce a daily close above psychological resistance at $1,200.00 an ounce. Above that lies strong chart resistance at the all-time high of $1,227.50, basis nearby Comex gold futures, which was scored in December of 2009.

The longer-term weekly and monthly charts for gold also show solid, longer-term price uptrends that have been in place since 2001. The weekly gold chart shows price action the past couple weeks has produced an upside "breakout" from a bullish symmetrical triangle pattern that had formed on the weekly chart.

It would take a close in nearby Comex gold futures below solid chart support at the $1,120.00 area to begin to dent bullish technical enthusiasm. To produce serious longer-term chart damage to suggest a major market top is in place in the gold market, nearby Comex gold futures prices would have to push below strong longer-term technical support at $1,034.00.

Importantly, at present there are no early technical clues to suggest a market top is close at hand in the gold futures market. The path of least resistance for gold remains sideways to higher.

By Jim Wyckoff, contributing to Kitco News;