Gold's Big Breakout is Here
Gold's breakout above the key $4,400 resistance level on Monday sets the stage for a surge to $5,000 and beyond, possibly within a month or so.
Over the past month, I’ve been closely tracking gold’s consolidation, noting that it was setting up for a major move higher with a target above $5,000. I expected the breakout to happen in two stages: first, a breakout from the triangle pattern that formed in October and November, and second, a far more important breakout above the key $4,400 resistance level that formed at the mid-October peak. Today, that second breakout has finally occurred. In this update, I’ll explain where gold currently stands, both in U.S. dollars and in the world’s major currencies, and what lies ahead.
As usual, I’ll start with COMEX gold futures, which are priced in U.S. dollars. As you can see, gold’s October pullback formed a triangle pattern, which it broke out from on November 28th. I’ve been calling that the “preliminary breakout” because I wanted to see a breakout above the $4,400 resistance level that formed at the mid-October peak for full confirmation. That is because breakouts from horizontal resistance levels are more reliable and meaningful than those from diagonal resistance levels, like the top of the triangle pattern.
Today’s 2.56% surge in gold pushed it decisively above the $4,400 resistance level, closing at an all-time high of $4,480.6 in COMEX futures. This is a strongly bullish development and exactly what I’ve been anticipating and discussing in my recent updates. I believe this breakout now sets the stage for the next rally toward approximately $5,200, which I’ll discuss shortly.