Gold’s triangle consolidation started in the beginning of July 2011 has come to an end after yesterday’s sharp rally and subsequent brake above important resistance level - $1640. This move is really important as price steps into new pattern which appears to be bullish for the precious metal.
|The unsuccessful brake under 200-day moving average confirmed upside trend for the gold|
The actual reason for such a sharp one day appreciation was extended low interest rate environment announced by FED. This move suggests that for the next two years we have cheap money which is bullish for gold. Dollar started depreciating already and probably the precious metal is back in the investor’s portfolio as a store of value. The dollar and gold tend to move opposite, although not in 100% of the cases, but this correlation have been seen last two weeks.
Technically next target for the yellow metal is $1950. This level is determined by the triangle’s length ($300) added to current price. However this scenario is extremely bullish and previous historical heights around $1850 is strong resistance.
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