Gold Update After The Big Rally

With Thursday’s big rally and gold hitting a 5 ½-year high, many people believe that this was a major upside breakout. I’ll start with the updated chart, which does not convince me - yet - that a breakout is in place. Of course, new information can change that view but we cannot trade based on what has not happened yet.

The daily chart is even more stretched. So, given this new information, the case for a major breakout is now in play but I need to see how the market reacts to its short-term condition. I’m not a buyer today, barring fresh geopolitical news, but a modest pullback to test the breakout would be a better way to play.

And just for further mud, the U.S. dollar index may be on the verge of a short-term breakdown, which will support gold. This is far from confirmed.

Here is the link to the original piece, written a week before the attempted breakout.