Gold is a tough market, almost as if those who designed it intentionally made it difficult to read. At the end of August there were still three meaningless futures contracts in play (September, October, and November) making it necessary for me to switch over to the monthly chart for the more heavily traded Dec contract only. The pattern on this chart is similar to what we seen on the continuous monthly chart, with activity during August allowing both market bulls and market bears to make strong arguments. I’ve been of the opinion Dec gold is in a major (long-term) downtrend since it posted a bearish spike reversal during August 2020. This past month saw Dec gold post a low of $1,675.90, taking out the previous mark of $1,683.00 before rallying to close at $1,818.10.
From a bullish point of view:
- The August low taking out the previous mark completed the requirements of a downtrend, and led to
- the a bullish spike spike reversal as the August close was $0.90 higher than July
From a bearish point of view:
- Monthly stochastics are still well above the oversold level of 20% indicating there is more room to the downside for Dec gold
- I’m still bullish the US dollar index, and there is a general inverse relationship between the two markets
The bottom line is I don’t have a good read on gold as September begins, so it’s a market I will probably leave alone for the time being. If I had to choose, I’d still be cautiously bearish.