More patience required from gold investors

Gold investors must be wondering when the precious metal will find some sustained momentum and finally break free from the trading range which has seen the price of gold oscillate in a $200 range for the last few years. And a look at the weekly chart sets really sets the scene for investors for the next few months.

First, the strong support platform at $1280 per ounce came into play once again in March, as shown with the blue dashed line of the accumulation and distribution indicator, helping to propel gold higher once more, as occured at the start of the year. However, ahead now are some serious obstacles to future progress higher, not least of which is the volume point of control which is anchored in the $1320 per ounce region and denoted with the yellow dashed line. This denotes the deepest concentration of volume on the chart, and as such we are likely to see congestion build once more as we approach this region. Should the metal manage to break higher, the next issue is the strong resistance at $1340 per ouonce and denoted with the red dashed line. Even if this level is also breached, sustained volume extends from here through to the $1380 per ounce region, before further price based resistance then comes into play both here and at the key $1400 per ounce level.

Finally moving to the monthly chart, highlights the strength of this last region which is immense, and does reinforce the problems for gold longer term. It is this level greater than any other which is likely to dictate the longer term outlook for gold investors from a technical perspective. If the gold price does break above this price point, this will surely open the way for the development of a longer term bullish trend – and who knows – the 1400’s will be left far behind with a move to the 15’s and 16’s.

Charts from NinjaTrader and indicators from Quantum Trading