We need to talk about gold

Alistair Strang, January 23 2016

At time of writing, gold is trading at US$1,096 an ounce. As the chart below shows (okay, poorly) the yellow metal is not exactly selling in a favourable region.

It’s had a pretty neatly defined uptrend since 2006 and the price has melted below this level.

A price of US$1,096 is reasonably respectable. But I would harbour extreme concern if people now start paying less than U$$1,050 USD for the shiny stuff.

The implication of this price threshold? Weakness down to US$750, perhaps even US$698 if it all goes really wrong.

Can miners keep digging at these levels?

As usual, I find myself looking for reasons for this NOT to happen. The blue line provides it.

The gold price needs to better US$1,150 to escape the danger zone. But ideally it should cross the US$1,450 threshold to utterly scupper my calculations for weakness.

When I review what's been happening since the world markets decided to commit suicide, gold hasn't really done anything of interest.

The situation currently is the metal needs better U$1,110 to trigger movement to around US$1,125 USD.

In itself, this is a fairly unimpressive move. But if it were to actually trade above US$1,125, I could take that as the first signal the price has bottomed.

For now, it's trading pretty exactly half way between the devil and the deep blue sea. That said, the bears are watching and, apparently, we are in a bear market.

Alistair Strang is the founder of www.trendsandtargets.com

Alistair Strang