10:25 am Pacific
There is no question, the fundamentals for Gold are exceptionally bullish as we’ve been stating consistently since BMR was launched two years ago. At the moment, Europe’s debt woes appear to be worsening and economic numbers that have come out since late July clearly show that growth is slowing to a crawl in both the United States and Europe. Whether the developed markets are about to slip into another recession, however, is a hotly debated issue (below is a link to an excellent article regarding that matter by Gavyn Davies in today’s Financial Times – we suggest readers check it out).
John: The “Big Picture” of the Gold price shows there has been a lot of volatility during the past 4 weeks since it broke above the inner resistance channel line. The price reached a new resistance level, retraced and is now attempting to reach the previous high.
Over the immediate to short-term, I’m cautious with regard to the Gold price. The RSI shows Gold very overbought and the price gradient since July1 is clearly unsustainable. Last week’s volume dropped slightly and the buying pressure remained constant. The +DI component of the ADX trend indicator peaked at a very high level around 50 and has since retraced and created a divergence with price. This is very significant because +DI measures how strongly the price moves upward. The inner resistance channel line is now support, so if the expected retracement and consolidation breaks below this line the Gold price could easily retrace to the channel support line (green).
