Gold Testing Resistance

Gold bounced off downward resistance at $1670 four weeks ago, and has had a good run since, meeting upward resistance at $1830 this week. Friday marked the highest weekly close for gold in twelve weeks, with a strong finish after a dramatic August that ended unchanged.

This paints a strong picture of gold. There's also an inverse head and shoulder forming in the weekly chart. The neckline corresponds to the upper line of the wedge formation we're currently in. It runs through $1860 at the moment, only $30 above the $1830 line that has been resistance for the past ten weeks.

If $1830 breaks, $1860 is likely to break as well. The gold price will then test resistance at $1920 and $1970 before testing $2100. That's a lot of resistance. However, the upward pressure from a completed inverse head and shoulder formation will be strong. Once $1860 breaks, there's potential for a $240 move up, which happens to correspond to $2100; our year end target.

With four months to go before year end, our target is still within reach, even with multiple resistance lines on the way up.

Rococo Cup with handle

By Vincennes Porcelain (France, circa 1739–1756), Francois Binet (France, active 1750-1775, born 1731) - Image: http://collections.lacma.org/sites/default/files/remote_images/piction/ma-31852871-O3.jpg Gallery: http://collections.lacma.org/node/229367 archive copy, Public Domain, Link