Throughout this pandemic, the price action in the gold market has been quite interesting.
In 2020, as the Federal Reserve turned up the money printing to full power, gold’s initial reaction was to explode higher to new all time highs above $2,000 per ounce.
But, the market didn’t stay there for long and it quickly backed down to under $1,700.
As inflation really began to rear its ugly head last Spring, gold was barely able to get back to $1,900 before falling back again.
Since then, it has traded within an ever tightening trading range.
This is a weekly chart going back a few years.
On Friday, Gold broke out to a new multi-month high, before settling back down to within the middle of that day’s trading range. It then followed through today and closed above Friday’s high.
It is interesting that this breakout occurred, not on the back of inflation news, but on the back of Russia’s supposed imminent invasion of Ukraine.
It’s reaction to last week’s inflation report was actually quite muted.
Nevertheless, gold looks like it is finally ready to get moving to the upside.
The next major breakout level is above $1,880, and we are just a few dollars short of that as I write this. Once above that level, gold will likely embark on a move that should test the August 2020 highs at around $2,089.
On the April 2022 contract, the next major breakout level is just above $1,883.
Turtle style traders likely already have a small long position and will start adding more as gold approaches $1,880. A typical volatility stop loss at these levels will be trailed about $45 under the primary breakout level.
There may be a bit of a skirmish between the bulls and bears at these levels, but the longer term price structure is quite bullish.
Please keep in mind that futures trading involves significant risk of loss and is not suitable for all investors.
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