Gold: The World's #1 Asset Class

Posted May 11, 2010

The current tension in financial markets is providing an additional lift to gold prices. Targets based upon the 1980 to 2007 consolidation continue to point to levels above $2,000.
In the short term, the mid-March bottom suggested strength would be seen through late-May or early-June with a pause at the 7/8th speedline.
Previous April-May rallies have concluded with daily RSI(14) readings of 79 to 85 (currently 72) or upside Exhaustion Alerts caused by a solid week of urgency in buying pressure. The pullback to test the breakout of $1160 on May 4th and 5th alleviated the ‘urgency' leaving the market free to rally once again.
Upside targets for the next few weeks start at $1236 with the most common advance being 19% ($1290) from mid-March, but surprises could be to the upside so we recommend waiting for overbought readings before lightening up on trading positions.

Mid-March bottoms produce rallies of 14% to 36%. A 14-day moving average of the lows should provide support on pullbacks.