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Very interesting price action in the gold market lately.  For the 4th time in the last year the price of gold has approached but not clearly broken through the 1360 level.

 

1 year chart of Gold futures

 

I drew that white line at 1360 and you can see back in September of last year it touched the line, failed to break through and then retreated lower again.  In January and February of this year we’ve also seen the same failed breakout pattern.

Now here we are again and the price action from the overnight session was interesting.  Let’s take a look at just the last day:

 

1 day / 1 minute chart of Gold futures

 

At the open it was right there and it was looking good, but as of now there just may not be enough buyers at this level to push it over 1360 and beyond.  Still too early to call it but if this one fails that will be the 4th time in the last year we’ve seen this play out.  If we go back 5 years we can see this has been going on for quite a while.

 

5 year chart of Gold futures

 

Now we’re not day traders so this doesn’t really affect us.  This is just for interest sake but what is of interest to us is how gold will react during the next recession.  Since our VTS Tactical Balanced Strategy will likely spend most of it’s time in bonds and gold during an extended downturn we’ll be very interested to see if gold can catch a bid then.  Here’s gold performance since the last stock market peak before the financial crisis:

 

Gold futures since Oct. 9, 2007:

 

Oct. 9, 2007  (S&P top)  through Mar. 9, 2009  (S&P bottom)

S&P 500  (SPX):  -56.7%
Gold  (GLD):  +23.9%

Oct. 9, 2007  (S&P top)  through Mar. 28, 2013   (S&P recovery)

S&P 500  (SPX):  0.21%
Gold  (GLD):  +111.3%

 

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