Bullish continuation pattern complete. $1,338/$1,383 near term resistance levels. Longer term trend reversal remains in play.
· Gold completed a bullish symmetrical triangle pattern last week <chart#1>.
o This pattern projects a minimum price objective to $1,425.
· Spot Gold traded with a negative price series for 2.5 years until the move above $1178/$1200 and the pivotal 50WMA in the first half of February this year <chart#2>.
· Above $1,383 is a historic low volume trade zone which lacks significant resistance levels.
· Cross asset focus: €/$ in breakout mode above 1.1530. Negative correlation to the US$ remains.
Chart#1. Spot Gold $/Oz Daily. Including 50DMA.
· Key focus: Bullish symmetrical triangle pattern.
Chart#2. Spot Gold $/Oz Weekly. Including 50WMA, Volume at Price indicators.
· Key focus: Resistance levels at $1,338 and $1,383.
Remain positive above $1178/$1200 breakout zone targeting resistance levels $1295/$1338/$1383. Positive price action and momentum now in play. Key range in the near term $1208 to $1272.
· Spot Gold traded with a negative price series for 2.5 years until the move above $1178/$1200 and the pivotal 50WMA in the first half of February this year <chart#1>.
· Price posted a near term 'higher low' in March <chart#2>.
· Momentum indicators have turned to positive mode while Gold Price Volatility continues to fall with the %age daily Average True Range is now 1.5% vs 2% twelve month high / 1% twelve month low <chart#3&4>.
· Negative correlation to the US$ remains. Key range support in DXY = 93.13. Key range resistance in €/$ = 1.1534.
· Key support Gold: $1208 near term range support, $1200/$1178 February breakout zone.
· Key resistance Gold: $1272 near term range resistance, $1295, $1338 and $1383.
Chart#1. Spot Gold $/oz. Weekly chart. April 2012 to present day. Inc 50WMA.
Chart#2. Spot Gold $/oz. Daily chart. July 2015 to present. Inc 50DMA.
Chart#3. Daily momentum dynamic Spot Gold. Weekly and Monthly readings remain positive.
Chart#4. Volatility. Average True Range %age. Spot Gold.
Spot Gold broke above its $1200 major resistance level today, if price remains above $1200 (currently $1216) for the weekly close tomorrow look for a direct move toward $1295 (Q1/2015 highs).
· Gold has traded with a series of lower highs and lower lows since a bearish triangle completed in September 2014.
· $1200 marked the previous high (October 2015) in the negative sequence.
· Positive Gold move during extreme equity selloffs as per DM Government Bonds (US10 year yield now 1.6% from 2.28% on 4th Jan).
· Primary resistance is $1295 with secondary resistance at $1339 and R3 at $1383.
Spot Gold $/oz. Weekly chart. May 2012 to present day.
Gold vs S&P500. Daily Chart. November 2015 to present day.
· Panel 1: Gold vs S&P500 price.
· Panel 2: Gold vs S&P500 ratio spread.
· Panel 3: Gold S&P500 40 day correlation.
Guy O'Leary MA, MBS, MSTA, APA
Global Macro Strategy Team