Gold bugs are once again happy this week, and the recent breakout for gold continues to signal further bullish momentum, with spot gold just failing to touch a high of $1700 per ounce this week for the first time since March, and finally closing the week at $1691.18. Gold futures ofcourse reflected this bullish momentum, and indeed Hawkeye gave us an early entry signal on the daily chart, with a conservative trend Roadkill. This upwards momentum was almost inevitable following the extended period of sideways congestion, and in particular with the strong platform of support in the $1550 per ounce region, clearly defined by the Hawkeye pivots, a level that was never tested.
The other contributory factor is of course the short term weakness in the US dollar which is likely as a result of the FED’s clear signal of further stimulus to the economy, and should this weaken the US dollar further, then gold prices are likely to extend the recent breakout into a longer term trend. As mentioned above, Hawkeye has already given us an initial entry signal, and with the Hawkeye Heatmap now bright green and coupled with buying volume in both timeframes, we can now expect to see gold prices breach the $1700 per ounce level next week, and extend gains further, with a bullish trend which could see the precious metal test the $1800 per ounce level in due course.
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