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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