Gold Breakthrough!

Gold – London PM Fix

(Average Monthly Gold Price Based on London P.M. Fix)


It’s barely discernible but for the first time since the end of January 2013, the monthly average gold price has as of the end of this week exceeded both the 20-month average and the 40-month average. Specifically as of Good Friday, the average gold price thus far in April is $1,259.01, which compares to a 20-month average of $1,251.54 and a 40-month average of $1,225.56. With some technicians suggesting that gold is now overbought, we shall see if the average price for gold remains above both long-term averages. But what we can say is this long-term measure is certainly looking more bullish for the yellow metal than has been the case for some time.

Certainly Michael Oliver’s work is not pointing to a bearish scenario for gold, at least when looking at his annual momentum charts. Michael sees the first layer of resistance for gold this year at $1,428, which is 18% above the three-year average in 2012. Michael suggests that the level that indicates a drive to that 18% oscillator level is exceeding $1,309 ($1,321 for good measure), which, is this year’s annual momentum match of last year’s momentum high of $1,377.

But as Michael told me on my radio show last week, he thinks gold is not likely to exceed those key numbers until the dollar finally heads south, as he thinks it soon will. Specifically Michael is watching 99 on the index very carefully. Starting this week, a close below 99 will signal a breakdown in the dollar and a strong wind at gold’s back.