Gold continues to rise on expectations of quantitative easing — whether from the ECB or the Fed.  In our last update [see: August 22 Update on Gold] prices had reached our August 15 target of 1655 and had broken out of the descending triangle we’d identified.

Our target at the time was 1762, which is starting to look a little less far-fetched.  But, we’ve reached a level where we can expect a significant speed bump.

continued…

First, there’s the 1.272 extension of the smaller harmonic pattern to contend with.  Remember, this likely Butterfly put in a Point B at the .786, so it can extend to either the 1.272 at 1711.90 or the 1.618 at 1762.30.  At the moment, we seem to have stalled here at 1711.90 shown above.

Next, there’s the daily RSI to contend with.  We’re bumping up against a channel line (in white) that has influenced previous rallies.  While the incursion still looks a tiny distance away, RSI charts are not über-precise.

Last, there’s the not so small matter of the ghost of channel lines past.  Those dashed, white lines sloping upward have a history.  They’re shown below in yellow.

and…

but, wait, there’s more…

Uh-huh.  So, let’s not be surprised if — after 12 years — they continue to exert a little influence for a few more days.

Put it all together, and we should be wary of a pause here.  Whether it turns into something more — threatening the purple channel line — will likely depend on what Mr Draghi has to say later this morning.  If he disappoints, a pullback might be in store.  We could reach as low as 1678 without even leaving the purple channel.

But, I expect the overall direction to continue up.  That Bat Pattern .886 (in pink) and Butterfly Pattern 1.618 (in red), intersecting as they do at 1762 at the apex of a rising wedge, make too tempting a target.

GLTA.