Gold Price Breaking Out?

Ah memories! Remember 2011 when gold busted out. It seemed like nothing could stop its rise higher. In 12 glorious August days gold moved from a low of $1,678.10 to $1,909.30. In September it made one more push higher to $1,920.80 only to fall all the way back to $1,532.70 later that same month.

I don't say this to rain on the current parade. I would be very happy to see gold keep going higher.

It has been a very good run for gold thus far. Just this month gold has moved from a low of $1,167.30 to as high as $1,282.40. The move has been quick and sharp, especially over the past few days.

Gold has moved up six days in a row (assuming today is another up day). If you glance over the price bars, or volume bars at the bottom, you'll notice that isn't something that happens all the time.

Gold Breaking Out Again?

So, here we are again. I'm not betting for or against this year being another 2011 for gold. But gold is having a bit of a breakout moment. However, as revealed in the first chart, those breakouts tend to have consequences down the road.

I suppose this type of movement is akin to Newton's third law of motion:

When one body exerts a force on a second body, the second body simultaneously exerts a force equal in magnitude and opposite in direction on the first body.

There often tends to be equal and opposite price actions, and reactions as outlined by Alan Andrews and his ideas. Andrews is probably most famous for his Andrews' Pitchfork, but I am very partial to his expression of action-reaction in prices - it's something I'll be touching on in another post with the gold and silver markets.

Bottom Line: Gold has had a nice run higher. Given the past, it could run up further. However, the higher it runs outside of the extreme Hurst Bands shown in the first and third charts, the more extreme price pullback we might expect later on.