Gold Charts Update after Major Drop

Gold in a Triangle



Gold Continues its Drop

Gold and silver have done well to post, what is becoming, rare gains today given the risk-off trade we have seen across the other financial markets, and the rallying US dollar. This goes to show that despite their recent weakness, some investors still see gold (and silver) as the ultimate safe haven asset choice. That is true in the physical form anyway, with reports of increased demand from Chinese investors buoying sentiment today. However in the paper market, I cannot rule out the possibility of further losses for precious metals, although silver may have formed a bottom after bouncing from where it should have – around $19.50. This was the last major resistance area which had capped the grey metal’s gains up until late 2010. When price broke out from here, it staged a one-year parabolic-like rally which ended disastrously just below the $50-mark. Now that price has returned to the so-called point of origin, it may start its next major leg up from here, and could lift gold prices with it. This is certainly a feasible possibility and so it is well worth watching silver prices with closer attention as we head into the twilight era of the Fed-interfered markets. Fawad

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