[ TREND SPOTTING ] text : Soh Tiong Hum

Gold Rally Accelerates

Overhead Resistance Will Determine Pace

October, as well as the 2011 high visited in September last year. The latter serves as an important psychological barrier. If the current trendline (red) holds, we could see its price testing the overhead levels again shortly. Each test increases the significance of the resistance but in the absence of a bearish reversal pattern, it also increases the likelihood that a successful breakout will take place. New highs will follow in this scenario. If the red trendline fails, then golds price could become stuck in a horizontal range or even slip to where the longer trendline (green) is. Such a scenario will not please gold bugs but need not be a negative development. Written based on data available on 14 November 2012

ince it broke out of a double bottom formation in late 2002, Gold has rallied every year except in 2008. As the US continues to debase the US dollar, declining faith in the worlds reserve currency is leading to heightened uncertainty and hoarding of gold. Hexun, a Chinese financial website cited sources that mainland Chinas import of gold through Hong Kong surged by 30 percent to 69.7 tons in September from a month earlier. It also estimated that the November import could surpass the total gold stock of the Netherlands. Zerohedge, a financial website commenting on international financial news speculated that Chinas total gold holdings could shortly surpass Germany (World no. 2) and perhaps the United States (World no.1) as well. Although Zerohedge is unconventional in its reporting, it has been at the forefront of new developments. From the weekly chart below, we can see the gold price rally accelerating since 2008. At the moment, it is consolidating between US$1,525 and US$1,800 per ounce. Looking ahead, there are two resistance levels: the current 2012 high established in February, which was validated again in

Soh Tiong Hum is a regular contributor to SharesInv.com and the Malaysian Edition of . Follow him with Twitter @sohtionghum

Gold rally is accelerating and each test of overhead resistance increases the chance of a breakout to new heights
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11/16/12 10:52 AM