For gold traders and gold investors, the daily chart for the precious metal has delivered some simple and clear examples of the power of volume price analysis, and how it can help us not only identify reversals and turning points, but also help us to stay in a position – which is the hardest part of trading success, bar none.
The technical support platform in the $1305 per ounce area came to the rescue of gold once again last week, with five consecutive days of gains, taking the precious metal from the gapped up open of Monday at $1313 per ounce to end the week at $1341.70 on the December contract.
Last week’s bearish engulfing candle for gold on the weekly chart appears to have had some follow through at the start of the new trading week, as the precious metal fell victim to a renewal of risk appetite as most global equity markets made fresh monthly highs, and the S&P and DOW soaring into new high ground.
Dithering by the FED, coupled with associated weakness in the US dollar have both combined to provide gold bugs with some much needed good news in the last couple of week, with gold rising Lazarus like from its trough of despondency in the $1110 per ounce region, to positively sparkle at the $1190 per ounce.
Despite being bearish on gold (GLD, quote) for so long, and sounding to many gold (IAU, quote) traders and investors like a old recording stuck in a groove,
Panic – what panic. Not according to the price of gold and whilst other markets have seen extreme volatility with equities plunging, currency pairs opening gapped down, and the VIX moving violently, gold has continued to remain calm and serene throughout, with hardly a murmur to reflect the turmoil around.
Many traders immediately think of precious metals like gold (GLD, quote)when hedging inflation.
Regular readers of my market analysis will know that I have been bearish on gold for some time, and despite the recent bullish trend which has seen gold move from the lows of $1170 per ounce to the high of late January at $1310 per ounce, have remained so.
As we come to the end of 2014 and look forward to 2015, for those trading and investing in gold the perspectives and conclusions will no doubt be very different and entirely dependent on whether you are a longer term investor in the precious metal, or a short term speculator.
To say the last few days have been a roller coaster ride for commodities would be an understatement, with both oil and gold providing some sensational trading opportunities, but for very different reasons. For gold, it was the Swiss referendum over the weekend, and for oil, it was the OPEC meeting in Vienna.
