Gold Short-term Uncertainty But Long-term Bullish

GOLD
After hitting its first two targets ($780 and $840) gold is taken a breather. The Aug to Nov rally has left behind it two more targets yet to come, the next at $915 and then to $1125. For those to stay valid gold must not give a bear signal on the long term P&F chart. At the present time, without any further ups and downs, that signal would come on a move to the $630 level, some distance away. However, I would expect the action to cause more ups and downs with a resulting higher reversal signal level. For now the P&F is still comfortably BULLISH, long term wise.



As for the usual charts and indicators, they also are comfortably inside their positive zones. The Index action is still well above a positive sloping long term moving average line and the momentum indicator is comfortably in its positive zone. However, and there is so often a however, the momentum indicator is giving us a warning of underlying weakness in the recent price action. Although gold is still above its low of a few weeks ago the momentum indicator has moved below its low previous levels. It is moving lower ahead of the price giving us a warning for the continuation of downside action. Now we know that nothing goes in one direction for long without some reversal action coming to play, but what the momentum is telling us at this point is that any reversal will be short lived. Volume is also a problem but I will cover it in the next section.

Despite the weakness this past week and the potential for more, the indicators require a BULLISH long term rating until validated otherwise.

INTERMEDIATE TERM
A nasty week but the price still has not breached the intermediate term moving average line, and the line is still pointing upward. As with two weeks ago the price seems to have stopped just above the line. As with the long term, the intermediate term momentum indicator is still comfortably above its neutral line but is showing warnings of weakness. The Friday close has the indicator just below its Mid-November low ahead of the price making a similar low. The momentum indicator is now where it was just at the start of the rally in early September.

The volume indicator is the one giving us the most trouble. November has seen the daily volume level consistently quite high, above the 100,000 mark almost every day. However, that volume did nothing for the price and the volume indicator is now plunging, indicating more and more of this volume is going to the down side. Not a good sign at all. With the moving average and momentum I would still be inclined to rate the intermediate term as bullish or at worst, + neutral but if we add in the activity of the volume then I must downgrade the rating to at best, NEUTRAL.