However, the recent rise in the price of gold has the lookings of a ‘relief rally’. As the short to medium term chart on the daily timeframe shows (see first chart below) the gold price recovered after a strong decline of 20 percent which started early November.
Visibly, former support is now resistance (see red horizontal line on the first chart). In other words, the daily chart shows the importance of $1220 gold. A firm move higher would suggest strong buying, and bullish tactical momentum.
InvestingHaven’s research team notes that the $1220 level is not only important on the medium timeframe but also on the long term. Below chart is the weekly on a 5-year horizon. As seen, gold remains in a falling channel. Such a pattern is typical in a bear market, and it is certainly a characteristic when gold is in a bear market. Interestingly, one of the falling trend lines shows resistance exactly at $1220.
Moreover, the weekly chart shows that a failure of gold to move ‘structurally’ above $1220 could result in a retest of the lower area’s of the falling channel.
Both the medium and long term chart suggest that $1220 gold has a high level of importance.
Fundamental factors could be in favor of gold, but for the time being investors have decided to continue with gold’s bear market.
Typically, gold gets a bid in times of inflation or fear (panic) in markets. None of both conditions are met at this point, until proven otherwise of course. So long, the 2017 gold price forecast remains the same.
The SPDR Gold Trust ETF (NYSE:GLD) fell $0.29 (-0.25%) in premarket trading Friday. Year-to-date, the largest ETF tied to gold prices has gained 4.71%, versus a 1.06% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Investing Haven.