In May and June, gold fell by approximately 8% from its peak as bonds sold off and higher interest rates started to bite. As I explained in my last update, gold’s spring sell-off caused it to break down from a channel pattern that had formed since the fall of 2022. A channel break-down is usually a sign of further weakness ahead unless it is negated by a break back into the channel.
At the moment, gold is attempting to re-test the lower portion of the channel. If gold can break back above, then that is a bullish sign. If gold bumps its head at the channel, however, then that would be another sign of weakness. It is also important to keep an eye on the $2,000 to $2,100 resistance zone that is just overhead. If gold can close above that zone in a convincing manner with high volume, then that would be a very bullish sign.
The weekly gold chart makes it easier to see the importance of the $2,000 to $2,100 resistance zone that’s overhead:
The monthly chart of gold shows that it is still in a long-term uptrend because it is above the uptrend line that began in the early-2000s:
For now, it is important to see whether gold can negate its channel breakdown and if it can finally close above the $2,000 to $2,100 resistance zone. Regardless of shorter-term moves, I am quite bullish on gold in the longer-term due to the global economy’s hopeless debt addiction that guarantees that more monetary stimulus (aka “money printing”) is ahead every time the economy stumbles.
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