Gold Is Hitting a Wall. It’s Time to Lock In Some Profits.

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Gold appears to be stalling as it contends with formidable resistance at $2050-$2075 per ounce—the area of the 2020 and 2022 highs. But if gold could stay in the upper end of its three-year trading range, then this timeout could be the last one before the metal blasts off later this year.

To review, my work generated a Buy signal at $1675 on Nov. 8, 2022, as reported in that day’s Institutional View. When gold reached a 2.5-year trendline resistance in the $1950 area, I recommended that clients sell half of their position, as reported in the Jan. 26 Institutional View.

Fast-forward to early March, when bullion solidified support with a bullish reversal off $1800. (A bullish reversal is a higher high than the prior week, a lower low than the prior week, and a close above the prior week’s high.) In the March 10 Institutional View, I recommended that clients return to a full long position.

Most recently, in the April 8 Institutional View, I recommended that clients take profits on half of their gold position at $2008. Why? Because momentum was making a lower high—even as bullion made higher highs and pushed to the top of its resistance channel.

Meanwhile, the

U.S. Dollar Index
is stabilizing at support and will bounce 2%-5% higher. If my work is correct and the Dollar Index firms, then bullion would likely pull back to the $1950 area. But if I’m wrong and gold hurdles $2100-$2120 resistance, then we would reload and return to a full long position.

Andrew Addison is the author of The Institutional View, a research service that focuses on technical analysis. 

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