Babak posted about a possible double top forming in Gold (and Oil) in his blog a few days ago. While I agree with his technical analysis on the daily charts, I disagree with his conclusion that Gold has topped out. In my mind, Gold is driven 80% by fundamental reasons instead of technical analysis. If you look at the weekly chart, Gold looks poised to possibly make a run higher after this consolidation.
Anyone can argue over technical analysis but in the end I believe that Gold is driven by fundamental reasons for one critical observation I make. The longer I trade Forex, the more I begin to see Gold as a currency rather than a commodity on the open market. Since all currency prices are driven by fundamental and sentiment forces mainly and based on the macro economic conditions we are experiencing globally, I believe that Gold will indeed move higher from here.
Then again I could be wrong and Babak right. After all, these differences in perception and value is what makes a market. :)
Update October 2019:
Just look at where Gold is 12 years later. Almost doubled from where it was when I first wrote about it and opined about some silly double top. All that drama. All that effort and time spent. Note, I didn’t write ‘wasted time’ because blogging about it made me into the writer I am today.
Gold is that weird asset that’s not a tech company and it doesn’t inspire people to change the world. It acts as a hedge for fear and we have a lot of implicit fear right now. The world is starting to tear itself apart as the USA starts to deteriorate. It’s probably wise to have a few gold coins stashed away just in case but I believe Bitcoin is where it’s going to be at going forward.