Last week
Gold futures, week ending Feb. 12, 2016
GOLD broke through its latest 4-month consolidation range and roared further up on short covering. It had its best one-week performance in four-years, gaining more than 6%. So far the price is up more than 18% from last December’s low.
Last week’s trades
Gold futures, Feb. 12, 2016. 60-minute bars.
Gold made a huge run up last week. The weekly range was just 50 cents shy of $100, almost triple the recent weekly movements.
However the breakouts occurred so quickly a lot of traders were unable to catch much of the move.
The price never touched neither the pivot point nor Nat’s key line last week. Instead it moved up in overnight trading Sunday, and climbed about $35 Monday, then spend the next three days fluctuating around Nat’s second sell level.
After Wednesday’s trading it made another breakout move overnight, and shot up another $65 in a day, before dropping off a little at the end of the week.
The first leg was worth about $3,500 to traders who were quick enough to catch the full move; the second leg was worth about $6,500 to a fortunate few.
This week
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Gold futures, Feb. 12, 2016. Weekly chart.
The 4-month range breakout momentum move was very strong last week. This could help hold GOLD price above the broken resistance level for a while. Any pullback into $1191-87 zone will continue to be bought by shorts losing positions covering.
At the same time, the weekly unfilled gap at $1157.70 will become a major short-term support area. As long as the price stays above it, the short-term trend remains bullish.
But based on the weekly chart, GOLD has made a move similar in timing, direction and distance around the end and beginning of the year for the past three years. Each time the high established early in the year was the high for the year, and was never touched again.
Here are the numbers:
End of year rallies in gold futures
| Year | Low | High | Length | Trading days |
|---|---|---|---|---|
| 2013-14 | $1,181 | $1,392 | $211 | 11 |
| 2014-15 | $1,130 | $1,308 | $178 | 11 |
| 2015-16 | $1,025 | $1,264 | $239 | 10 |
This year has moved slightly further and slightly faster than previous start-of-year rallies. But the similarities are more striking than the differences. And the downward trend – lower highs and lower lows – has been going on for a long time.
We may have further to go in this rally, but it’s a little early to be talking of gold about $1500 by the end of the year, as some commentators are.
The price remains in its intermediate-term downtrend channel. The overhead resistance line lying at $1290-$1307 zone could prevent the price from popping up further. The short-term indicators have an extremely overbought condition, it could lead to a small pullback to retest the broken resistance zone this week.