Gold: Ready to Shine?

It’s happening again. The notes from gold bugs are starting to flood in, wondering whether this time is different, whether the breakout is real.

Recall that our last update [June 7 Update on Gold] came tantalizingly close to a bullish call.

If DXY falls through the midline of the purple channel (96.10) then, sure, GC could complete the IH&S and keep going. But, I think it’s unlikely. I think central bankers are loath to see gold break out, just like they’re loath to see the dollar break down past a certain point.

As it turned out, DXY did fall through 96.10.  On Aug 10, GC popped up above a powerful trend line of overhead resistance (below in yellow) that has been confounding gold bulls since Sep 2011.   It’s latest affront came on Jun 6, when it presided over a 7.3% month long reversal. Note that it was so strong as to send gold lower even while DXY fell (they are normally negatively correlated.)

As a result, GC finally tagged the .786 Fib at 1323.30.  And, each test launch from North Korea and tweet from the White House lavatory sees it tick a little higher.

Will it finally break out?  Is gold finally ready to shine?

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