Gold had been in a 6-year downtrend since peaking in 2011 until breaking free in August 2017. Just because something ceases being in a downtrend does not make it a good investment because it could, like gold did, consolidate for many months or years after breaking its downtrend. But downtrends, followed by consolidations are usually the sign of a new uptrend …. You just need to be patient, wait for the opportunity to come to you and dont chase.. Oh, did I mention the need for patience? In the case of gold, it is on that cusp as you can see in the chart below.
For investors, gold becomes an interesting asset to own if it breaks above its 1370 resistance (neckline) as its first upside target is at T1, around $1600. Those astute observes will also notice in the bottom pane, the increase in green (accumulation) volume bars is the confirmation we want to see if it eventually breaks out. With global stocks stuck in a sideways consolidation (at least for now), finding a non-correlated asset that is potentially embarking on a new uptrend is all we could ask for.
