Gold Technical Analysis October 12, 2011

The gold markets fought hard for gains on the Tuesday session, and managed to pierce the resistance level, but only to fall in the end. The resulting daily candle is a bit of a hammer, but at the top of the recent range. This could be either supportive or bearish; it really comes down to which way the market breaks next.

The $1,675 level is our mark, and if we can close above that – we would be buyers in this market. The overall trend is still up, and it should be noted that the consolidation is looking more and more like an ascending triangle – a very bullish pattern. However, we need to see a higher close to get involved in this market at this point in time.

The global issues ahead will almost certainly continue to push gold prices higher over time, but in the mean time, we are waiting for our close above the $1,675 level in order to get long of this market. We will not sell as the trend is simply too strong to short gold.