Gold is enjoying its best run – since the 2020 top

By Friday’s close, gold had risen for an eight consecutive week. And that marks its best run since the 2020 top, which chalked up an impressive nine consecutive weeks of gains. It could suggest that gold’s rally is getting stale, but it is so close to the $3,000 milestone that it is hard to imagine it not at least tapping that level temporarily before an inevitable pullback.

 

If we compare the current 8-week rally to the 9-week rally of 2020, the bullish momentum of this one is more impressive. The 2020 high also provided a bearish hammer before its retracement lower, whereas last week’s candle closed just beneath its bullish highs. So unless a clear sell-signal for gold arrives (such as a stock market correction), I suspect gold could at least briefly tag $3,000.

 

But that is a very big level, and one I imagine will prompt many to book a quick profit if achieved.

 

 

It is worth pointing out that the record high set in October was answered with an 8% retracement. An 8% retracement from $3,000 ($240) would see gold prices pull back to $2760. Incidentally, this is near the December VPOC (volume point of control).

 

The weekly RSI (14) has reached overbought and the RSI (2) has been on the zone for seven weeks by Friday’s close. While I think gold stands a decent chance of tagging $3,000 this week, I do not feel the need to partake in this cheap $40 shot at the big milestone. I would prefer to wait for a dip before rejoining the trend, which seems poised to continue above $3,000 as the year progresses.

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge