First, the bullish force is that August till December is the seasonally strongest period of the year. Particularly August is a month in which the metals close almost always higher, as we wrote here and here.
On the other hand, the dollar, which is in general negatively correlated with gold, has started an uptrend recently. The following chart is the same as the previous one but with it shows additionally the dollar (grey line). The blue lines are the dollar’s trending lines for 2014. They show that the key chart formation has been a triangle. The purple oval shows that the dollar broke the trend a week ago; it has been moving steadily higher since then.
Interestingly, but unsurprisingly, the yellow metal has closely tracked the gold miners index (HUI) for the whole year. The fact that there is no divergence between the metals and the miners is not really telling anything about gold’s prospects. At least it is not a bearish sign neither.
Going forward, gold should respect its key support area, especially during its seasonally bullish period. Today, July 25th, spot gold closed at $1307.65, up 1.32% on the day. For an uptrend to establish, at least three consecutive closes above $1310 are required.
Chart courtesy: Stockcharts.com.
This article is brought to you courtesy of Gold Silver Worlds, who advocates to own physical gold and silver outside the banking system.