Gold's rally continued last week and reached as high as 1214.8. Initial bias remains on the upside and further rally could be seen to 1227.5 high. However, as note before, we're treating rise from 1044.5 as the second wave of the consolidation from 1227.5, we'd expect strong resistance at 1227.5 to conclude the rise from 1044.5 and bring reversal. Below 1193 minor support will flip intraday bias back to the downside first. Further break of 1156.2 will turn outlook bearish for a test on 1044.5 support. Though, note that decisive break of 1227.5 will confirm up trend resumption for 1300 psychological level next.
In the bigger picture, our preferred view is that price actions from 1227.5 are consolidation in the larger up trend with first leg completed at 1044.5. Rise from there represents the second leg and should conclude after being limited by 1227.5 and bring the third down leg towards 1044.5. However, note that sustained trading above 1227.5 high will indicate that the correction has indeed completed at 1044.5 already and long term up trend is resuming. In such case, Gold should target 100% projection of 931.3 to 1227.5 from 1044.5 at 1340.7 next.
In the long term picture, rise from 681 is treated as resumption of the long term up trend from 1999 low of 253 after interim consolidation from 1033.9 has completed in form of an expanding triangle. Next long term target is 100% projection of 253 to 1033.9 from 681 at 1462 level. We'll hold on to the bullish view as long as 931.3 structural support holds.
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
From the staff at Oil N'Gold
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