Technical View On Gold’s Recent Breakout

Gold broke out above declining tops line resistance with its almost 2.4% gain on Tuesday 9th. Since the dollar was rising most of the day and was only down a half of a percent, gold’s move was mainly due to more gold buyers. The PMO has nearly reached zero and has surpassed the last PMO top which is very bullish. A big move like this could mean a snap back toward the point of the breakout before we see higher prices.

 

Gold_9_december_2014

The Central Fund of Canada (CEF) and Central Gold Trust (GTU) stocks still are selling at very high discount rates, but it may have peaked last week. Note also that the weekly PMO for gold has bottomed and is making a move toward a positive crossover. A positive PMO crossover would generate a weekly PMO BUY signal. To read more about gold discounts and premiums, click here.

Gold_WEEKLY_9_december_2014

 

Conclusion: It is unclear how long this rally in gold will last, but our indicators are confirming positive momentum. The Trend Model will not move from its intermediate- and long-term SELL signals until the 20-EMA has a positive crossover the 50-EMA. That would generate an intermediate-term Trend Model BUY signal. The long-term Trend Model will not change from a SELL signal until the 50-EMA crosses above the 200-EMA. That will require an extended gold rally in order to get those long-term EMAs to cross over.

Source: StockCharts.com

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing