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Got Gold?

gold
Click on any image for a larger view

As the S&P 500 Index is back negative for the year I thought you might like to see an asset class that is having a great year: gold.

I have annotated the chart above to give you a feel for the trend, but the most important thing on the chart I want to point out is the brown circle on the price chart – several days ago, the price of gold moved above the 200-day moving average (a bullish sign) and in the circle you see that the 50-day moving average is making an attempt to cross above the 200-day moving average (a very bullish sign).

These two cross-overs (if the second one happens) are signs of a trend change that could see gold move from its current $1379 per oz to the $1550 per oz level where there is significant technical activity (several instances of broken support and resistance over the past couple of years). I haven’t drawn it on this graph of GLD (the index fund I am using to represent gold for you) but it would be at the $150 per share level on this graph.

I have also drawn in several other annotations, but I want to point on the series of upward tilting blue trend lines – all indicate that investors are beginning to move money back into gold in the early stages of this rally.

However, if you see the two red arrows, they are pointing out that near-term, our sentiment indicators show that the move has become overbought and we could see a bit of a pullback before this developing trend continues.

I think we are seeing a lot of interest in Gold right now due to the Ukraine situation, particularly with Russian Troops massed on the border and US surveillance drones being shot out of the air – you can read about it by following this hyperlink to Yahoo News..

If tensions subside over the weekend, we will likely get a pullback that will ease the overbought condition – and then we will get to see if the fledgling trend that started before the Russian military action began will continue.

Markets moving higher are always more interesting than those moving sideways to slightly down – so we will continue to keep an eye on Gold and keep you informed here on the blog.

Have a great weekend of Big Ten basketball!

Mark

PS – Gotta love Barry White!