Saturday, March 19, 2011

When will Gold break out?

When is the next leg up for Gold? When will it break?  Gold has had a quadruple top and seems like the bears take over once it reaches the $1430 area.  Silver has been a better performer over the past few months and will most likely have better returns for the remainder of the year.

So when will Gold break out of it's $100 dollar trading range of $1330 to $1430?   The US Dollar Index may let us know when it will happen.

Here is the US Dollar Index since late September of 2010.  The last price was at 75.72 and is in a downtrend with the price under the short term 15dma and the mid 50dma.  The RSI is also heading down with lower highs. It is close to breaking the last support area seen in the first week of November 2010.  If this level is broken, it can be the catalyst for the next level for Gold.

Another potential reason for Gold to appreciate into the next month is with the Seasonals. Based on the last 15 and 34 year average, Gold will typically rise towards the latter part of March.  Add the US Dollar dropping and the Seasonals and we may have the right combination for the next bullish move for Gold.

The next obvious level for Gold will be the even number of $1500.  A 40/1 Silver Gold ratio will place Silver at $37.50.  Keep your eye on the US Dollar Index in the coming week(s)...

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