Gold Market Update
Originally published February 25th, 2007.
Gold has gone and done it - after first breaking out upside from its 3-arc Fan Correction in January, a major positive technical development celebrated in the article Gold powering up for major uptrend - SECTORWIDE BUY ALERT, last week it smashed through the ceiling of resistance at and towards $680, with subsequent solid action confirming that this was a genuine breakout. In the Gold Market update of 23rd January it was stated "The situation is now very finely balanced with an army of traders either sat on the fence, or, depending on which way it breaks, on the wrong side of the trade. When it does break out - and it is beginning to look like it will be to the upside, there will be a stampede and an upside breakout from here could thus easily involve a $20 - $30 up day for gold." As you all know, that is exactly what we saw last week.
Many gold stocks are confirming the gold breakout. Of particular note is Streettracks, which is now in position for a powerful uptrend, and is the subject of an update on the site.
So, we are looking very good here. The prospect now is for the uptrend to gather pace. The first stop will be the resistance at last year's high, which it is worth noting is nowhere near as significant as the resistance level that has just fallen. Thus, although gold is likely to pause/react when it gets to $730, it shouldn't be held in check for too long before the uptrend reasserts itself and it breaks out and advances to substantially higher levels.