Last week gold broke through into a new trading range. GLD, our ETF gold trading proxy, broke above 126 and bounced off 128. People say gold is difficult to trade and hard to understand, which can be very true for the short term. But in retrospect, gold prices painted a fairly simple picture these last couple of months.
What the chart shows is a fairly standard range-bound situation pretty much through August. Then came a breakout, which has continued through last Friday. Confusing signals led many traders to stay mostly on the sidelines, which may yet turn out to be a good thing.
The real question is: What happens next?
And the answer is: We don’t know!