FLASH GAGE: Gold Relative Strength Index at 80%

My technician friends “AKA the gold chart traders” have been knocking at my door this morning bringing to my attention that the Gold Relative Strength Index now stands at 80.4 percent, indicating from the charts that Gold is extremely over bought at these levels. For those who follow the RSI here are the levels most look at:

Simply put:

  • Gold RSI below 30 signals the gold market is oversold.
  • Gold RSI above 80 signals the gold market is overbought.
  • Gold in the area of 50 signals a neutral stance or pause in price is expected.

The Gold RSI indicator measures market price momentum and is a tool some use to predict market tops and bottoms. By no means am I advocating using this tool alone to trade the gold market. It’s just tool a lot of folks use with other information to predict future trends. I for one, give the charts about a 10 percent reliability and that’s just one man’s opinion. (Sorry guys I know you love the charts.)

As I start to write this report we see gold breaking the $ 1,200 level after rallying from $ 1,046 on Dec. 3rd.

Equity markets experiencing somewhat of a free fall today and oil down over 3 percent and who could forget the treasury market in positive territory also. I also heard from a Wall Street Trader today the Funds are very active in the ETF arena.

So only time will tell if this momentum is sustainable. To my chart friends, thanks, I’ll be in touch.

Have a wonderful day.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.