Is the gold price going to party like it’s 2007? The striking resemblance between 2007 and today
Whilst we’ve made a comparison to this most recent pull-back in the gold price and the sell-off that happened back at the end of 2008, there is another pull-back during this gold bull run that actually bears a much closer resemblance than the one in 2008.
It is the pull-back that occurred during the first half of 2007 – and as you can see from these charts the side-by-side comparison is quite noticeable.
Spot the difference:
And on closer inspection we can see that the 2007 iteration is a lot closer in kind than the 2008 sell-off vintage:
Right at the end of 2005 you can see gold makes a new weekly closing high for the move of $453. The gold price then retreats from this high. Then 11 months later the gold price breaks through $453. Then crucially the price pulls-back once again and retests that $453 area and then breaks higher.
The gold price then moves to make a new high at $575. Again the price pulls-back before breaking through $575 in April 2007 where it then goes on to make another record high of $730.
The move from $453 to $730 is around 62%.
After making the record high of $730 there is a sharp correction back down to the old high of $575. The gold price then rallies back around 17% to the $675 level. There is another pull back once again to the old high of $575 where gold once again bounces from.
During this move gold never closed out the week below it’s old record high of $575.
Right at the end of 2010 you can see gold makes a new weekly closing high for the move of $1177. The gold price then retreats from this high. Then 7 months later the gold price breaks through $1177. Then crucially the price pulls-back once again and retests that old high of $1177 and then breaks higher.
The gold price then moves to make a new weekly closing high at $1560. Again the price pulls-back before breaking through $1560 in July 2011 where it then goes on to make another record high of $1920.
The move from $1177 to $1920 is around 63%.
After making the record high of $1920 there is a sharp correction back down to the old high of $1560. The gold price then rallies around 15% to above $1800. There is another pull back once again to the old weekly closing high of $1560 where gold once again bounces from.
Gold rallies nearly 15% again before pulling back again and retesting that old weekly closing high of $1560.
Crucially gold has never closed out the week below it’s old weekly closing high of $1560.
It also worth looking at a longer term chart to see how that pull back in 2007 now looks almost insignificant after the 235% rally in the price from that support line at $575.
Can we expect this more recent pull-back to similarly fall into obscurity as the gold price marches higher in the next 18-24 months?
It’s also important to remember that pull-backs in gold are absolutely nothing new and are all part of very health strong bull market – the fact that it’s back-and-filled all the way throughout it’s 13 year bull run is telling you that.
What holds the key is that $1560 weekly closing level of support – as long as that holds it’s quite possible that this is the bottom in this most recent correction. Currently gold is trading $1563 on this Friday, just above that important level – will… it… hold?
- Gold price softer today after closing at the top of its ‘box’
- Gold Price in Striking Distance of $1,400
- Gold price falls through its 200 daily moving average to $1670, down 2% for the day – watch the $1677 level into the close today
- Gold Joining the Party?
- Gold price rebounds as the 200DMA holds again
Link to this article: : http://www.goldmadesimplenews.com/gold/is-the-gold-price-going-to-party-like-it%e2%80%99s-2007-the-striking-resemblance-between-2007-and-today-6996/