I sat down with the gold chart today because I thought I saw something. And, upon further review, there might be reason for optimism.
If you'll recall, back in mid-June, I identified a bearish cup-and-handle formation that projected the gold price to about $1,200. Soon afterwards, gold was smashed down to around $1,180.
Well, it would appear that a bullish cup-and-handle may be on the horizon. I have provided a chart below, identifying the bearish formation from a couple of months back, and now updating it to include a bullish cup-and-(half a) handle. If I'm right, the projection is to at least $1,500 - the support level in June, which is now overhead resistance, is about $1,340. Given the low at $1,180, add that $160 spread to the resistance price and, voila, you have a target.
I am somewhat skeptical of technical analysis, but there have been enough occasions over time where I see a chart's pattern resolve itself right at the moment that some other news headline ends up encouraging the anticipated move. Currently, we have low gold inventories at the Comex, tensions between Russia and the U.S., concerns about the solvency of Europe, violence in the Middle East, a more shaky Chinese economy that has been hinting at some new form of Bretton Woods, and money-printing worldwide. The point being, that something could happen that's bullish for gold in the next few weeks, right as the handle portion is completed, suggesting that maybe it's worth keeping an eye on.
