We couldn’t help but notice the resilience of gold over the past two sessions. No matter if stocks were going higher or lower, gold was edging up. It was even able to break above resistance at 1167.50 to trace out a new high.
The first test for gold will be if it can close above 1167.50. It has failed in two attempts. We are encouraged, however, because there hasn’t been a strong rejection. Instead, gold has been able to hover around 1160. It also should be noted that gold is making new highs against the euro.
We see this set-up as potentially very bullish. The top of the channel also co-incides with $1200 and we think that is a likely target in the near term. A drop below $1145 would nullify our bullishness. We are also encouraged that the RSI is not in particularily overbought territory. We would consider holding any longs until it hits 80.