The bottoming process in Gold continues to progress nicely. We came
into the year with little or no Gold bulls on The Street. I seem to
recall blog post after blog post detailing the losses that gold
investors have had to endure over the past few years. In addition, the
media was constantly questioning the long-time Gold bulls and calling
them out because gold hadn’t gone up every year as it did for a decade.
Rather than focusing on a potential bottom, it was all about the lower
prices.
Well, that sort of pessimism is exactly how bottoms are born. So far
this is playing out nicely. Today we’re looking at two charts of Gold,
one is a daily and the other is a longer-term weekly to help put things
in perspective.
Here is a daily bar chart of Gold prices. It’s easy to see the double
bottom that got going right around New Year’s after Gold successfully
retested last summer’s lows. Momentum was also putting in a much higher
low, barely hitting oversold conditions on the second bottom:
There are two more things I’d like to point out here. After a 200
point rally in Gold to start the year, prices have pulled back in a
healthy way down to those converging moving averages. The red line
represents the 200 day simple moving average and the blue line
represents the 50 day. Also notice that on this pull back, momentum
failed to reach any oversold conditions. This is generally a bullish
characteristic.
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