Is the Rally in Gold Over, or Still to Come?
The precious metal emerged bullish from a week filled with peril.
The news over the last few weeks, including worries that a possible major banking crisis could cripple the Eurozone economy as a whole, has sent global financial markets down heavily. Many around the world are worried that Europe is about to face a big bankruptcy or sudden default that could set off a new phase of panic in Europe and beyond. It's been nearly two years since the euro crisis began with concerns about the solvency of Greece. Since then it has been a slow-motion drain of confidence and credibility as Europe's leaders have been putting out fires one at a time.
Still, with a new (European) bailout plan ahead, the near time price movements in stocks don't have to be bearish.
The situation is more complicated in case of the precious metals market, because of multiple factors being in place right now. We will start with the analysis of gold itself (charts courtesy by http://stockcharts.com.)
Let's take a look at the very long-term chart. Last week began with sharp declines in gold prices but the direction soon reversed and gold rallied strongly later in the week. RSI levels also moved slightly higher.
Last week's declines tested the support level and since it held, the situation remains bullish. Actually, since there have now been verifications of this support level, the situation is slightly more bullish than it was before. Other than the decline and subsequent bounce, little else has changed in the gold market.
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