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The Golden Trend Persists: Stay With ItContributed by Olaf Sztaba GOLD NOW: The yellow metal has entered the monstrous resistance zone between $425-430. It's the third time this year that gold has operated in this area and the final push should not be far away. The alignment of the most important trend gauges, the 50- and 200-day moving averages, confirms the persistence of the up-trend. Both averages are trending higher and the price action takes place above them. The shorter average (50-day MA) provides support at $415 while the longer one (200-day MA) follows the price of gold slightly above the $400 mark.
Expectations are high among market participants. Only for this reason, the struggle with the resistance zone around the $425-430 mark is not an easy one. There is doubt and uncertainty. That's fine. It is the nature of the market to eliminate as many bulls as possible before the rally continues. The struggle with the resistance zone around the $425-430 mark continues. It is only a matter of time before gold pushes through it. Once done, the next stop is around the $460 level. GOLD STOCKS: Both the XAU and the HUI are about to finish short-term corrections. The indices are coming back to their up-trending 50-day moving averages. The longer-term averages (200-day MAs) are still trading on a plateau but as the indices start pushing higher, the 200-day MAs should start turning to the upside. In the case of HUI, the correction took place within a strong resistance zone, between the 220-240 level. For the XAU, the 105 and 110 levels remain as the main resistance.
As indicated in our previous gold comments, during the latter part of the year gold and gold stocks usually perform well. There are two months left before the end of this year and they have historically been good ones for the gold sector. Seasonality, trend indicators and sentiment; the weight of evidence points to higher prices. THE INTERMEDIATE TERM: Since the outset back in 2000, gold has been in a true trending market. There is a tendency for market participants to overplay; that is, to enter and exit the positions on multiple occasions during the life of the primary trend. A similar phenomenon took place in the 90s when the technology sector remained in a clear up-trend. The best strategy, back then, was to go with the trend. Those who remained calm and did not overtrade registered the biggest rewards. This is just the beginning
of a long-term bull market. Those who stay disciplined and fully
invested during the entire length of this bull market won't need
another one. About NA-Marketletter ______________ |
