I think it’s now safe to say that gold has bottomed and is set to breakout to the upside. Yesterday’s close above $1,820 should encourage gold bulls to get more aggressive. Two things we need to see to confirm a secondary rally would be a pop through $1,838. That is the next resistance level and where the 50 DMA and the 200 DMA converge. A move above $1,838 will begin to drag that 50 DMA above the 200 DMA. Once that happens, you’ll hear all the talking heads pointing out the “golden cross” in gold. Hopefully Jay Powell’s testimony doesn’t mush this setup. He is at least acknowledging that inflation is moving faster than they expected. Just look at this week’s CPI and PPI. Inflation is heating up and Washington wants to pour more gasoline on the fire. Runaway inflation is unavoidable in my opinion unless we plunge into some unforeseen financial crisis. Inflation will be what takes gold back above $2,000.

Gold Aug ’21 Daily Chart
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Frank J. Cholly

Senior Market Strategist
Frank is a swap registered trader who brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.
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