“Gold bugs” believe the precious metal is a perennial store of value, but we are not so sure. Price action over the past 12 months, when US inflation was rising, is not great. Trading in the middle of the range in US dollar terms, it formed a bearish engulfing candle last week against the 50 per cent retracement resistance level. It is also a type of “tweezers top, two-candle” combination where the second week’s price action exactly reverses the gains of the previous one. Coupled with a massive dark and bearish Ichimoku cloud and its moving averages, we believe an interim top has been found and we are likely to drift back down to the area of US$1,200 per ounce.
