Gold Approaches All-time High

| August 31, 2010

Gold broke above congestion resistance in the $1,240 area today and the long-term uptrend is now approaching the all-time high from June near $1,256.

Two weeks ago, we noted the development of a bullish consolidation formation that suggested another long-term breakout had become more likely. Since then, the formation has continued to strengthen, increasing the odds of a move to new all-time highs even more. Technical indicators on the weekly chart have completely repaired themselves following the correction in late June and we are also entering the seasonally strong period for gold, so an extension of the long-term rally would be supported by the technical and fundamental environments.

A weekly close well above $1,256 would signal a major breakout and forecast significant gains heading into the end of the year. Since there is no resistance above $1,256, a confirmed long-term breakout has the potential to produce a move of substantial magnitude and duration.

Category: Commentary, Market Update


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