Gold-Will the bulls see yet another breakout failure?Bullish narratives I've seen published online over the last couple of years:
1. Gold is a hedge against inflation
2. BRICS Currency-it will be backed by gold
3. China is hoarding gold
4. Central banks are gobbling up gold
Given all these narratives, one would think gold has some pretty strong tailwinds yet it has had 3 breakout failures since these narratives began. Will this 4th breakout we are currently experiencing be "THE ONE"? Or is this LT chart forming a possible distribution pattern around the $2K price point?
When I look at this chart in its simplest format...the inability to firmly breakout 3 times previously tells me the market has been selling into the strength vs. a true belief in its bullishness. Typically you want to see a chart "break, test and go"...this certainly did not happen.
This evenings strong move up due to "war news" is now just about to a key area of resistance...the non-horizontal trend line (blue dotted line).
Reality of golds usefulness: "More than 80% of the extracted gold is used to make jewelry, therefore the jewelry industry is by far the largest processing sector for gold.”
So in simplest macro terms: to be bullish on golds breakout, one should be very, very bullish on the male consumer buying up jewelry to be given to his companion or be very, very bullish on the female consumer buying or wanting gold jewelry.
Newsflash-Taylor Swift tickets & Sephora have eaten away at the female consumer over the last couple of years and gold jewelry is not something on the Christmas list right now! (just saying...)
So I'll go out on the limb and say the gap up this evening will end up being a sell the news sort of event and we will eventually see yet another breakout failure.
Can't wait to hear all the gold bugs tell me I'm an idiot...but honestly, I just don't get the allure of gold and why it's discussed so much in trading/markets. We don't go backwards in time, ever. IMO gold is no longer what it used to be in terms of it's market impact hence why these breakouts keep failing...instead it's now mostly just used to make beautiful jewelry.
