How to read gold’s price chart? That is an interesting topic which is subject to a lot of controversy. That is because gold is driven by a multitude of factors. Looking carefully at gold’s chart, there are quite some insights to derive. We look at 10 key insights from gold’s long term price chart, which are important enough for every gold investor.
The controversy mentioned above is visible in the news headlines. In the last couple of days, we see how this analyst combines trendlines and Fibonacci on gold’s price chart, this analyst looks at inflation and stock market data as a driver for gold’s price (intermarket analysis in other words), and similar intermarket data are used in this gold price discussion.
Interestingly, InvestingHaven’s research team says that “gold is driven by all of these factors but, even more importantly, it is contextualâ€. That makes for a complex cocktail of factors. Gold’s long term price chart (see below) makes that point.
Point 1 refers to the risk on / risk off market cycles, in line with the primary market trends we discussed in Market Outlook 2017 According To Our Proprietary Indicators. Gold can move higher during ‘risk on’ market cycles. In other words, gold * can * be a fear asset, but not necessarily. Furthermore, gold can move higher driven by inflation, as seen in the 2005/2006 time period (point 2). So gold can be both a fear and an inflationary asset.
Point 3Â below refers to the channel in which gold tends to move, both in a bull and bear market. Over a period of 12 years, we see only one exception (October 2008) in which it moved outside of the channel.
Point 4 indicates how important support area’s can be. In the 2011/2012 time period, gold tested at least 5 times support, after which it broke down. Support at $1550 suggested a trend change, and it is clear how important some specific price levels can be.
