Investors anticipating the effects of inflation — or maybe just alarmed about pandemics and politics in general — are taking the classic fear gauge to a 7-year high. The price of gold hit the 1870 level this week as the metals markets, including silver and copper, kept up a rally that had kicked off from the mid-March lows.
The barbarous relic, formerly banned in the United States, is creeping up steadily to higher than it’s been for literally years and years. Gold is approaching its all time peak again up near 1900. The last time it approached that level was 2011. Many precious metals stocks are going along for the ride.
The upward angle of the price movement from mid-March is impressively displayed. Gold dipped below its Ichimoku cloud for about 2 weeks and has stayed above it since then. The last 2 days action shows gaps up in price which might be interpreted as excessively bullish sentiment, at least for now.
The weekly gold chart looks like this:
While media attention has been focused on bitcoin, cryptocurrencies and hot stocks such as Tesla, the oldest investment in the world has continued to rally, week after week. You can see how the March dump of everything affected gold as well — but note how it managed to remain above the up trending Ichimoku cloud.
The monthly gold chart looks like this:
This is the updated version of the technical analysis price pattern noted here back on June 22, 2019 in The Inverse Head And Shoulders Pattern Of The Gold Price: Is It For Real? It turns out that this type of price chart analysis correctly identified a classic bottom formation of a major commodity.
So, to be clear, if you had purchased the yellow metal when the Forbes.com Probabilities blog first noted this pattern last summer, you would now be sitting on substantial profits. Past performance is no guarantee of future profits.
The next resistance level for gold is the previous high of about 1900. That’s where so many sellers came in that it overcame buying in 2011. That’s a price area where this rally may encounter difficulty continuing. Should the metal close above that level, the bullishness might be hard to miss.
This is a powerful trend upward and it may be at the point even now where profit taking could be expected as “hot money” discovers the move. Nothing goes straight up forever, not even Tesla TSLA +1.5% or Amazon AMZN -1.2%.
It’s the entire precious metals complex that has taken off lately. For a price chart look at other stocks benefiting from the wider move, please read These 5 Silver Stocks Are Hitting New 52-Week Highs.