Gold may not break above $1,800 until Q4 but the bull market is still intact

Gold began a powerful bull market back in April 2001 when it was trading at just $255.95 per ounce. Just over 10 years later, in September 2011, the yellow metal reached a nominal all-time high of $1,923.70.

Since then the price has been stuck in a range between a low of around $1,525 and a high of $1,800, something which has caused several prominent firms to announce an end to the bull market. However, as the chart below shows, the major uptrend lines have not yet been broken or even tested.

A 17 year monthly logarithmic chart of gold (Click on the chart for a larger version)

A 17 year monthly logarithmic chart of gold (Click on the chart for a larger version)

Source: Chart courtesy of

In addition, the 14-period RSI (relative strength index) remains above 50, and this technical indicator has a long history of indicating bull and bear markets in gold. The RSI did briefly dip below 50 in late 2008 but it quickly recovered. Hat tip to Mathew Frailey at

As the stochastic oscillator shows, momentum is turning to the downside once again which suggest that gold will retest the lower end of its current range once more. The purple line shows a possible scenario in which gold then moves back to the top of the range before making one final test of support at both the lower end of the current range and the major long-term trend line.

This scenario would then see gold break out decisively to the upside, making new highs in both nominal and real terms.

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