Monday, February 20, 2012

Is Gold getting ready for another leg higher?

I've been truly stymied by the price action of Gold over the past three weeks.  As I stated in my commentary this past weekend it seems as though the "yellow metal" has lost its identity since the vicious sell off of September 2011.  And with the latest infusions of fiat paper into the European banking system one would think that there would be no stopping the rally that started up again right around the time of the LTRO of Devember 21st.  Nevertheless, the recent price action is lackluster.  But here's a weekly chart of Gold (Spot price) as of Friday's close that should put a smile on the face of Gold bulls:

Gold popped out of the consolidation triangle (green dashed lines) in the last week of January and seems to be developing what I consider a "bull" flag.

Certainly, the fundamental backdrop supports higher precious metals prices.  Based on the chart above we may see a resumption of the Golds rally shortly.