The Gold Currency Index Breaks Out

| October 13, 2010

The Gold Currency Index (GCI) closed moderately higher today, moving well above the previous all-time high from June.

Technical indicators have strengthened and are now moderately bullish overall on the daily chart, supporting a continuation of the rally. We have been waiting for the GCI to confirm the recent long-term breakout in gold, and today’s strong close forecasts additional gains for both during the next several months.

However, it is also important to note that gold is currently rising at an unsustainable rate as it experiences an essentially parabolic move higher from late July, so a violent correction will almost certainly occur when the rally ends and elevated volatility should be expected for the foreseeable future.

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Category: Commentary, Market Update

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