Gold Struggles In A Morass Of Volume Resistance

gold weekly chart

Last week was a struggle for gold which ended the week lower at $1879.60 per ounce and the precious metal has started the week with further bearish sentiment as it trades at $1856.40 per ounce at the time of writing. As I have outlined in many previous posts for gold over the last few months, it is the weight of volume which resides in the VPOC histogram which is the problem at present, and in truth, is almost identical in density to the VPOC itself at $1750 per ounce. This density travels all the way to the magical $2,000 per ounce area where it falls away dramatically. The VPOC histogram represents the relationship between volume price and time and gives a visual picture of the weight of positions, pending orders, etc which sit in these regions. As such this volume can be considered in the same way as price-based support and resistance, and what we are witnessing here is gold’s attempt to battle through a deep area of resistance which is hampering progress higher and likely to do so for the foreseeable future, at least until we reach that magic number at the top of the chart. Although not major, the key price-based resistance level is building at $1910 per ounce and denoted with the red dashed line a level which has been tested twice in the past few weeks thereby gaining in importance.

Moving to the volume at the bottom of the chart this has been broadly supportive of the bullish trend, with the selling volumes of the last couple of weeks neither dramatic nor large. However, it is quite possible with the second failure at the $1901 level as we had back in January 2021, that we could see a pullback which may be hastened by any recovery in the US dollar. Longer-term, however, I remain bullish on gold, not least as a result of the growing signs of inflation which are increasingly becoming headling news.

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