Gold Prices Consolidating

New York (June 28)  Often, we talk about different phases and patterns that the markets have. They rotate through the three basic phases, which are consolidation, breakout to the trend and blow-off. This week, we first experienced the blow-off pattern, which appeared on Tuesday, pushing gold to $1,442.

After Tuesday’s blow-off and key reversal, gold dropped as low as $1,401 this week. With the uncertainty around the globe and the G-20 meeting this weekend, gold has found itself back in a consolidation phase as it prepares for the next big move.

With the overall trend higher, our view is gold will trade to $1,500 before any major sell-off occurs. The key to watch for is a pullback to $1,380-$1,390, which looks to be an ideal spot for new money to come into these markets. The longer gold can stay in the consolidation pattern, the more bullish the next move will be.

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