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« A Competition for Mining Bugs! | Main | Gold: Just Simmering and Ready for Take-Off! »

Gold: Symmetrical Triangle Formation

After peaking in early November, gold prices have traded to form a symmetrical triangle formation as shown on the chart below.

Gold - Symmetrical Triangle Formation

The fact that this triangle appears to have formed means that gold prices are getting ready for a breakout, one way or another. Being gold bugs we are naturally optimistic and so we will look to the upside potential of this formation to begin with.

A breakout up out of this triangle would be good to see, but gold prices would still need to beat resistance at $840 to signify the beginning of another major move north. After all, as gold prices move past that $850 area we are in uncharted territory and future resistance level become harder to see. In this situation one must rely on the technical indicators such as the MACD, RSI and Stochastic to signal when the market is getting overbought.

However a downwards breakout of this triangle would perhaps have a more dramatic affect. Gold prices are trading nearly $100 higher than its 200 day moving average line in a precarious position. It is perhaps not so apparent how far gold prices have run up on the chart above, but if one takes a look at gold prices over a slightly longer period this becomes more clear.

Gold Longer Term 20 12 07

Looking back two years, gold was in a fairly similar position, having run up a fair way and trading way above its 200 day moving average. However gold did not pullback until the massive correction in May 2006, after gaining more than $200! It is possible that gold could behave in a similar way this year and go on from these levels to over $1000 in 2008, without first coming back to its 200dma. We certainly hope that this is the case, and we firmly believe that $1000 gold prices are just around the corner and we expect to see them within the first part of 2008.

However in the shorter term we are watching the triangle formation for signs of a breakout and the possibility of a trading opportunity. Longer term, load up on gold stocks at these levels because in a year from now these prices will be looking dirt cheap. Silver stocks are also a great buy at the moment in our opinion, for more detail please check our silver website and subscribe to The Silver Prices Newsletter for updates on the silver market. When you sign up to our FREE newsletters you also get all our trading signals sent direct to your inbox. Our most recent signal was too “Take Profits” on Hecla Mining at $11.89 on November 30th, HL is now trading around $8.64 so we have saved ourselves a drop of more that 25% on that silver stock.

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Lastly we would like to wish a Merry Christmas and a prosperous New Year to all our readers from all the team at!

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Reader Comments (2)

Your work is really outstanding, superb and one of the bests I know.
You put things very clear when everybody is confused.

Have a merry Christmas and a golden new year

December 20, 2007 | Unregistered Commenteret

Well the scenario didn't worl
we are at gold 1140 and going hiher
who would have thought.

BULL BULL BULL market gold. secular

March 8, 2010 | Unregistered CommenterBondo

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