November turned out to be an up-month in gold and the analogy to what happened in late 2012 is no longer crystal clear. Moreover, gold’s monthly upswing was accompanied by extreme, record-breaking volume. What can we infer from the latter? Will we see a breakout shortly?
In our opinion, that’s highly unlikely. Let’s move right into gold’s long-term chart – it will be easier to discuss the above issues with the price moves in front of us (charts courtesy of http://stockcharts.com).
Before we move to the details, let’s recall what we wrote about two weeks ago on gold’s big yearly volume:
We were asked to comment on the fact that the yearly volume in gold in 2016 was huge (even bigger than the one from 2011) and that the volume in gold so far this year is already bigger than in 2016. In particular, the question is if this is bullish, as both 2016 and 2017 were years when gold rallied. After all, an upswing on big volume is generally a bullish sign. (…)
In short, it doesn’t seem that it’s an important factor for the gold market’s outlook. It’s not even clear that it’s bullish at all.
The reason is provided by the context and there are multiple factors that make any bullish implications rather irrelevant:
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