Gold Prices Seeking Higher Support Levels

Having completed the much needed correction of $100 an ounce, gold prices have absorbed current levels, and have formed a strong resistance point at $1,300 per ounce, while at the same time support levels seem to be forming higher.

This week started with yet another effort to break the strong resistance point, although volume was not enough to sustain higher prices, which then receded around $12 per oz. Still, this is very good news, as every time a resistance breaks, even momentarily, it becomes weaker and weaker.

In addition, it seems that gold prices simply refuse to drop below $1,290 per ounce, and every low is higher than the previous ones, starting with the $1280 per ounce three-month low that ended the correction.

What goes on now is technically called a “pendulum formation” with the width of the oscillations getting progressively smaller. Eventually, and before long, gold prices will finally have to move towards a direction, and all indications are that they will move upwards, since the metal’s fundamentals remain very strong.

Besides technical analysis, the $1,300 threshold acts as a psychological barrier, as if an ounce of gold would be much pricier at $1,305 than at $1,295. After the barrier breaks there is no resistance until $1,350 an ounce, and that’s not bad at all, considering the price at which the precious metal started the year. A positive trend with a few occasional stops and corrections for the market to absorb prices, and new investors to have the chance to come aboard is the ideal case for any solid investment with a reasonable return, and that’s exactly what gold has proven to be so far.

Gold prices and market mood

There is no doubt that gold has the potential to achieve much higher prices, as demand is currently heaving, and all available gold for sale is instantly absorbed. What happened in 2013 is no excuse to feel unsafe investing in gold, but except for the Chinese and the Indians, only large Western investors are convincingly interested in the yellow metal, and this is a terrible mistake.

Small private investors are once more influenced by what they see on the Internet, without being able to tell right from wrong. They read that gold is a wealth eater-but how can that be, when it has been for centuries the definition of wealth preservation? They still count on the dollar, the world’s reserve currency, for their savings, even though interest rates are below inflation and the dollar is weakening every day, and- for many analysts- is at the brink of collapse.

We are told that the US economy is on its way to recovery-but how is this possible when there is no growth, and the next quarter will probably chronicle the start of a recession? With its policy following the credit crisis of 2008, the Fed launched massive re-monetization efforts with its QE programs; the results are now obvious.

Gradually and regularly building your gold portfolio is the best approach to an ever-expanding market. To find the correct timing, you will have the aid of, a company with a large experience in the field.