Long-term uptrend and major lateral trading band
The above charts provide a long-term perspective for gold. The first chart shows the pricing for SPDR Gold ETF (ticker:GLD) for the period 2005 to 2012 in the logarithmic scale. The second smaller chart extends the date range from 1974 to 2012 and shows the actual price of gold in U.S. dollars in the linear scale.
There are two generally accepted principles in technical analysis: (1) individual stocks and broad indexes move in trends, and (2) the trend will continue until there is evidence to the contrary. How is this relevant for gold? The long-term trend for gold is up and is currently trading in a major and intermediate lateral trading band. And the near-term trend is down. Given the assumption that the long-term uptrend will continue for gold, a breakout above resistance of 174 and 185 (ticker:GLD) would confirm the continuation of the long-term uptrend. On the contrary, a break below support of 150 (ticker:GLD) would raise a red flag for the continuation of the uptrend.
Significant dates in modern gold history:
- August, 1971: Then-U.S. President Richard Nixon takes the U.S. dollar off the gold standard, which had been in place with minor modifications since the Bretton Woods Agreement of 1944 fixed the conversion rate for one Troy ounce of gold at $35 (U.S.).
- March, 1973: Most major countries adopt floating-exchange-rate system.
- January, 1980: Gold hits record high of $850 an ounce.
- August, 1999: Gold falls to a low of $251.70.
- November, 2004: SPDR Gold Shares ETF launched
- November, 2005: Spot gold breaches $500 for the first time since December 1987.
- May, 2006: Gold prices peak at $730 an ounce.
- November, 2007: Spot gold hits a 28-year high of $845.40 an ounce.
- March, 2008: Benchmark gold contract trades over $1,000 for the first time in U.S. futures market.
- September, 2008: Spot gold rises by nearly $90 an ounce, a record one-day gain.
- September, 2010: Gold prices reach $1,300 an ounce.
- September, 2011: Gold prices hit a high of $1,895 USD/oz
Relevant articles picked from the Web:
- Investors cut holdings as gold slumps further toward bear market — FP — April 4, 2013
- Gold cycle looks to have turned as holdings collapse — FP — February 27, 2013
- 12 charts that will make gold bulls furious — FP — February 5, 2013
- Developments In China Explain The End Of Gold’s Rise — Seeking Alpha — January 30, 2013
- Goldman sees gold falling $500 an ounce — FP — January 17, 2013
- Gold stocks to surge as much as 90% this year: fund manager — Globe — January 14, 2013
- What a Gold Mine! — Barron’s — December 22, 2012
- Gold Shines Brighter in the Charts — Barron’s — December 19, 2012
- Gold may be set for a tumble — FP — December 19, 2012
- Sterne Agee: Three Gold Stocks We Like — Barrons — December 5, 2012
- Goldman Sachs: Buy Gold! — WSJ — December 5, 2012
Note: The above chart analysis is valid as of the publication date. To review current charts click on Home or perform a search. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.
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