The Ukraine government, installed by a U.S.-sponsored coup d’état, is bombing rebellious provinces near the Russian border. Yawn. The Israelis are bombing the defenseless residents of Gaza. Again. The Muslim terrorists of the new Caliphate of Iraq are crucifying fellow Muslims who follow the same God in a different way. Ho hum.
It is all reminiscent of a song the Kingston Trio popularized a generation or more ago: “They’re rioting in Africa, tra.la, lah, la la.” And as usual, when the world is going to hell in a hand basket, buy gold.
On the long-term chart (see inset below) the outlook is not clear. Gold, as represented by the futures contract, remains inside the long-term downtrend, inside a medium-term range and within a triangle pattern that could be resolved by a movement either up or down. Who knows?
But for the shorter term, from a technical perspective gold is looking good. The price broke out from a three-week trading range and closed above it on Friday. The continuing strife around the world is good for gold – buy when the cannons roar, remember – and while short-term indicators are overbought, the longer term shows room to the upside.
We expect that any pullback this week will encounter new buyers.
By the numbers:This week 1358.50-62.50 will be the major resistance zone and 1305-07.50 becomes a short-term support. A move above 1365 level will confirm a short-term inverted head and shoulders pattern and lead to a further rally.
Gold futures, July 11, 2014
