|On October 28, 2008, I wrote that on an intermediate-term basis, "gold is currently at a level of significant support. ... While gold can move lower, like it did last week [to below $691], without breaking the support levels, prices now appear in a favorable position to buy." (See Figure 1.) |
Since then, not much has changed. Gold has undergone a consolidation period vacillating between the previously reached $691 level up to $777.
|FIGURE 1: $XGLD, DAILY. Gold has undergone a consolidation period vacillating between the previously reached $691 level up to $777.|
|Graphic provided by: Wealth-lab.|
|The technical picture remains mostly the same from my October 28th report. Gold has held the support levels previously provided and has possibly formed an additional short-term trading pattern that provide even further support at the $700 level (shown as the green line on the chart). In addition, the weekly stochastics are deeply oversold. For the intermediate term, gold still looks to be in a position to buy.|
|To Figure 1, I have added an additional trendline showing the potential price target for a move up in gold. Duplicating the bottom black trendline and fitting it to the peaks of gold's prices form the trendline. It would likely take months for prices to make it back to the top of the trendline, but even by the time it does, prices would likely be around $850, if not higher.|
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