The bottom line is gold is extremely overbought today, warning of high risks for a sharp selloff. But even after rallying so far so fast, this powerful gold upleg still looks to have lots of room to run.
Getting off the idealist views and back to the technical view, gold’s weekly chart is purely bullish. The pattern of this chart targets $2450. This is a purely bullish breakout to blue sky.
So when I come to the gold market, number one, it's fighting off a rally in the dollar. Number two, it is fighting off, very successfully, a rally in interest rates.
Many observers will naturally worry about the next correction after unexpected and sudden strength. It is almost a knee-jerk reaction after many fits and starts in recent years.
When you take a look at what the market did, you can see the market was down $14. It didn't feel like it, it felt like it was higher because it was able to bounce from there.
When we look at the gold market, it's up another three-quarters of a percentage point, up another $17 for the week. For the daily charts, it's still moving right along – the pattern has been and continues to be higher lows and higher highs.
Gold, and in particular, silver, had a buoyant week, climbing higher last Friday despite the surge in nonfarm payrolls. One would expect the release to temper gold back, as it will be longer before any rate cuts materialize now.
