Last week ended with gold holding onto its gains and managing to stay above the psychological level of 1000/oz. It is especially good news as Friday was the day when various stock options, index options and futures contracts expired. This bewitching hour can have an effect on gold prices as the larger institutions try to avoid or at least minimize their loses.
Taking a quick look at the chart we can see the RSI has hit '70'and started to head lower, the MACD and the STO are also high which suggests that gold is overbought at the moment. Over the next few weeks gold could consolidate and indeed drift a little lower with the gold producers following the price down. Its a hard call to make but you may want to take some money off the table and lock in some of your profits. Its often said that micro analysis is near enough impossible to do and we agree with those sentiments but we do get asked these questions in our mail bag so we will give our 'take' on it, but it is only an opinion.
The next four weeks could be a drifty period with mainly sideways action taking us to the middle of October. From then on we expect gold prices to continue to improve right through until mid January 2010, establishing new all time highs along the way.
Our stance at moment is to sit tight as we feel its better to be in then out of this market and we don't want to be left at station if gold does suddenly explode and takes us by surprise. If your strategy is to take some profits then please stay on your toes and look for signs and indicators that will give you clues as to when this rally will resume.
Back on the 1st November 2006 we wrote the following:
So, the question is “Are you in position? Have you bought the gold stocks that you have been watching for such a long time?
Do it now. Don’t wait; you will not see $600.0 again!
01 November 2006
The time is fast approaching when we will be writing that you will not $1000/oz again!
Enjoy this sparkling day but don't go to sleep, the economic environment is changing at a fast pace so read as widely as you can to stay on top of events and build your portfolio in this sector in an orderly fashion.
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