1. America was built by “citizen champions”. Should the current gold price action be described in a similar way, as a “rally of champions”? I think so.
2. Technically, gold is arguably overbought.It may be due for a correction according to cycle analysis, and yet the world’s mightiest metal just keeps moving relentlessly higher.
3. Here’s a snapshot of the SPDR fund tonnage.Solid buying has boosted the holdings to more than 820 tons:
4. Also, a potential “rally accelerant” has suddenly manifested itself, in the form of an end to the Indian jeweller strike:
Click to enlarge this key four hour bars gold chart.
5. It could be persuasively argued that gold has essentially traded sideways because of the strike.
6. Now that the strike is over, demand appears to be rising in the world’s most important gold market, and gold is rising up nicely, from a small inverse head and shoulders bottom pattern.
7. My $1320 area target remains within reach on this rally. In the big picture, I think that as bullish as Janet Yelllen’s first rate hike was for gold, her next one could turn the gold price rally into a serious “barnburner”!
8. This eight hour bars chart of the dollar versus the yen has ominous implications for the dollar:
Click to enlarge.
9. A bear flag is in play.In the big picture, it’s almost impossible for gold to experience a major setback, when the dollar is tumbling against the yen.
Click to enlarge.
That’s a longer term chart of the dollar versus the yen, using daily bars.
10. An enormous top pattern is now in play, and dollar rallies are quite frankly best described as “pathetic”.
11. A breakdown from the current 111 – 115 range could unleash a new wave of dollar selling, yen buying, and gold/silver buying.That could easily push gold towards my $1320 target, and leave the dollar wallowing in the 105 -107 zone on the dollar-yen chart.
