Gold’s Next Leg Up May Start This Week

October 25, 2009 · Posted in Weekly Posts

The USD continued to decline in its channel this week while gold largely traded sideways in a nice tight symmetrical triangle consolidation pattern. USD is approaching a resistance level but we do not expect that it is a strong resistance level. Consequently we think that gold is poised to break higher this week and start its next leg up likely towards the $1100 region. (see charts for USD, USD long term, and Gold below).

Later this week we will examine some of the recent developments in the gold market hat we think will drive prices substantially higher over the coming months.

The S&P has been consolidating nicely this week though in a rather chaotic fashion for those who were in it. Judging by the charts and past behavior we expect this consolidation will largely complete this week. How much of a move higher we get is any one’s guess but it should be safe to be long solid stocks once we’re done.(see annotated chart below).

Finally, Shanghai also looks like it has broken above key resistance and is ready to move higher again. This will add to the likelihood of the S&P also moving up. SSEC chart is at the bottom of this post.

USD 10/23/2009

USD 2-Year Chart 10/23/2009

Gold 10/23/2009

SPX 10/23/2009

SSEC 10/23/2009

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