More Boxes and Lines

2020年12月26日

Following from our broad look at gold's potential fate(s), we can see that price action has continued to respect the support structures at the top of the chart, indicated by the yellow box. This, along with good news in EU affairs should see price action remain relatively stable for the time being. Notice the sell volume over the last few months, which failed to break the resistance channel at the bottom of the yellow box, this is a war the bears lost.  Whilst this recent performance has been great and a real test of asset strength (which it passed), we are still at a historic top in terms of price action, and in an ideal world I'd like to see this range tested and confirmed over the course of years, not months. But we don't live in an ideal world.  With the printing presses still burring, and the western economies still pulling a "Weekend at Bernie's", the suggestion that gold value will exponentially increase still holds merit. One note of caution on the fundamental level is the vaccine. A possible "bounce back" in western production and consumption could see safe haven assets take a hit. I personally find this unlikely as money printing has kept a bloated market propped up, and much of the malaise predates covid. By a decade. In my opinion, a vaccine will probably not cause a rampant recovery (although there will be a relief rally). But none of the other, huge, impediments causing the decline will be addressed by vaccination.  Accordingly my gold outlook is positive as far as one can reasonably see. My most aggressive buy would be $1835, my ideal somewhere around $1750; and the brown trouser line $1600.