Keeping The Spirits Up

In a Business Week profile of his opinions on gold, Aaron Smith said that gold is still looking good on a long-term technical basis.

“This is simply a normal pullback,” Smith said in an interview in London. “Gold is still above its one-year trend line and considerably above its 150-day moving average. The long-term momentum is still there.”...

“Every time the RSI [relative-strength index] has approached the 40 level, it’s been an excellent opportunity to purchase gold,” Smith said. “Until we see the 200-day moving average breached, the uptrend is still intact.”

The article doesn't make clear what timeframe Smith is using, but this daily Stockcharts.com gold chart suggests he's referring to the daily:



There were times when the RSI has dipped below 30, but those were harrowing times for gold bulls.


Smith's comments can be interpreted in three ways: at face value; as an indication that gold is in strong hands that are staying the course; or, that there isn't the kind of skittishness or gloom that accompanies oversold levels. It's true that the gold price is below a longer-term moving average, which does indicate an intact uptrend. On the other hand, the price looks fairly vulnerable at this point. The daily MACD indicator at the bottom of the chart has turned into bearish territory...and so has the weekly, as shown by this chart: