How About the Shiny Metal

Gold had a pretty good year in 2010. But a few other metals had an even better year! What do the chart tell us about the future? Let's look at gold first. The futures opened at $1099 on January 3, 2010 and closed at $1422 on December 31. Close to 30% up for the year. Here is the chart:

It had a nice run between August and October, however, the trend has slowed dramatically since then as displayed below:

Price is still making higher lows and higher highs, but the corrections are frequent. And on Friday, the lows from the previous correction were broken. Does this mean we are going lower?


Looking at my indicators, the long term trend is still bullish, however, the medium and short term trend indicators have both turned bearish. Over the last 3 corrections, only the short term indicator did so indicating that this correction might be stronger. The setup resembles more the July correction at this moment.

Using the lows of August and the highs of December as reference, we can see some Fibonacci resistance at $1336 and $1307. In addition, the 3 month regression channel holds around $1340. This should be the first reference point. Should we hold there, there might be another run up. But it has been a lot choppier lately. And we will need to keep an eye on the dollar as strength in the currency will sap momentum in the shiny metal.