The strength has been building for weeks; while equities tumbled (SPY -7.26% and QQQ down nearly 13% in 2022) gold has held strong, and every little blip lower has eagerly found buying. With Friday's close, gold has eclipsed the $1850 level for the first time since Thanksgiving 2021.
Technical analysis isn't rocket science, it is the study of market participants through the study of price action, volume, and other indicators. While we can make it as convoluted as we like, the reality is that price and volume are the two primary technical 'indicators' and everything else flows from these two. Gold has been making higher lows for many months, a classic sign of accumulation:
GLD (Weekly)
In the last few months, the strength in gold had been subtle but it has gained strength in recent weeks as equities came under pressure. Last Thursday and Friday's gold buying spree was the first time we have seen buyers aggressively take offers and drive the gold price decisively above the $1800 price magnet.
The trendline drawn in the above chart helps to illustrate that gold has snapped a series of lower highs drawn from the January 2021 peak above $1950. Buyers are in control and pundits can try to explain Friday's gold action as being due to Russia/Ukraine tensions, the reality is that something much larger is at play.
The biggest moves come from broad bases, just like the one gold has formed over the last 12+ months. CNBC will tell us "why" the move happened after the fact, however, the charts are telling us today that the risk is to the upside in gold.
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