Gold’s bull run may turn into a multi-month consolidation


It has been an incredible week for gold, as it climbed higher and higher on market jitters to finish the week with a light round of consolidation. The yellow metal began the week around $1642 and in three sessions moved rapidly upwards to a high of $1814, before coming back down to around $1750, which is still an impressive 3.5% gain.

Tumbling world indices and debt crises helped provoke this rapid flight to safe – haven as cash flowed towards gold trusts, underscoring record highs for spot gold prices.

According to data, during the seven days to August 10, SPDR Gold Trust and iShares Gold Trust, two of the world’s largest gold trust funds, had their fourth biggest week of net inflows. The last time weekly inflows reached a similar level was late in February 2009, just before a large rebound in world stock markets.

Investors and traders are panicking, seeing the stock market drop and volatility rise, therefore they turn to gold as a default move. It is not clear how far the downturn in equities will reach or whether it is going to turn around.

However, some analysts warn the latest gold top could be a sign the 34 – month bull – run is about to endure a multi – month consolidation due to the cyclical
wave pattern the charts appear to be forming.  Maximum Gold top could form at around 1862 – 1900 per ounce, while 1805 is being already hit, which is a qualifying – fibonacci fractal top as well.

Investors should be trimming back positions and looking to re-deploy back into Gold at better prices. A huge blow off top over 1900 could occur, but it would be very very rare if it happens.


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