Gold Chart 4 Sep 2009G

Gold Chart 4 Sep 2009G

Speculation surrounding the sudden surge in gold prices continues and summed up the FT’s Alphaville Blog simply as “gold madness” for which no one has a good explanation.   Whatever the reasons (fundamental, technical or a blend of the two)  following the breakout from the pennant pattern on the daily gold chart on Wednesday, yesterday’s price action simply confirmed the move as expected with a surge higher in gold prices which ended the day on a wide spread up bar, and just failing to breach the $1000 per ounce level, which now seems certain to be reached if not today, certainly early next week. More significantly, the gold market broke above the resistance in the $982 price level, and with virtually no other resistance ahead, the longer term trend higher appears established. With all three moving averages pointing higher, and with the strong breakout now complete there is only one way to trade gold in the short term and that is to the long side. With the long weekend ahead, and following the sharp gains of the last two days, we may see some short term profit taking today, as gold traders square their positions ahead of the three day weekend, but the trend next week should pick up again on Tuesday as the gold trading markets open once again in the US and Canada – have a great weekend and enjoy the ride in the next few weeks!