What is on every gold bugs mind?

From Kitco

Lets start by looking at gold around 9:30 EST on January 2nd, 2011.

Gold fell off its most recent high, and bouncing around the 1415 range.  I have mentioned this before, but I find that when gold is trading during the Asian market times, it seems to be an indicator of where the market is heading.  A few months back, gold was only dropping when the North American Markets were open just to be bid up a few hours later.  This led to new highs in the gold market.
To put this 1422ish resistance level into perspective lets look at the gold daily chart from the rally in August.

First note this chart is not up to date, as January 2-3 has not been accounted for yet.  The horizontal cyan line is the at 1415 which is where the gold market is currently.

First thing to note is bollinger bands, the week close almost directly on the top band.  Bollinger bands are designed for the market to trade within them 95% of the time.  Therefore, when the price action is above the bands it is likely that an adjustment will occur.  Which could be what we are seeing at the start of today.  This does not mean price can't run along the band or trade above the band for multiple days.

MACD Look very bullish, above the 0 level and the histogram has higher ticks that the previous indicating increasing upward momentum.

Slow Stoch however, is over sold.  This indicates that sell off is likely but then again, there is no definitive statements just probabilities.

Added some trend lines, so if we do see a raise to new highs I would expect a 1440-1445 resistance level, but at this stage I will not be looking to buy the metal market as it seems to be overextended.


One other bullish point is how well the Moving averages have held, for the past month and a half.  If the 20 / 50 MA start breaking down, I test of the 200 MA could be the next likely target.

Gold I am quite bullish on, and do believe the price will climb over the year, but currently, the stock market and commodities seem expensive, and any rush back to the USD will cause a decline in the Gold market.  Remember 2008, when stocks began falling, margin calls caused forced liquidations of almost all asset classes.  This resulted in metals taking a beating, however, silver and gold bounced back much more quickly out preforming the stock market.

Technical Charts from: Free Stock Charts