No HC didn't like that!! Google search the text in bold to read...

No HC didn't like that!!

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Gold's tedious coiling action tightens as inflation surges

The key $1,800 area continues to be a magnet for gold. Rallies have been sold, and sell-offs have been bought with traders on both sides continuing to be whipsawed out of position. Since mid-2021, any advance, or decline, that bullion has made quickly ran out of steam and has returned to the $1,800 zone.

This frustrating sideways movement inside of a tight $100 range has resulted in what technician's call "coiling action", which will likely end in a sharp move in either direction. The tighter and lengthier the trading action becomes around $1,800, the more pronounced the eventual move will be, whether up or down.

Gold Futures closed the month of January just below $1800 per ounce, remaining inside an 18-month bullish symetrical triangle that is awaiting a strong catalyst to break in either direction soon. On the upside, a monthly close above $1900 would support the next leg higher in gold. On the downside, a monthly close below $1750 would set up a possible move towards strong support being tested at $1675.

The longer the consolidation, the bigger the move will be once the breakout occurs. With the long-term bullish uptrend line providing consistent support, the likelihood of a bullish breakout is higher than a bearish breakdown. Looking at the bigger picture, gold has created a significant 12-year cup and handle pattern, which would be completed once the $2100 level has been breached on a monthly closing basis.

There are not too many examples of a multi-year cup and handle pattern in the major markets, and investors should understand how bullish this pattern can be when it occurs over a long period of time. The current cup and handle pattern in gold projects to a technically measured upside target of around $3,000.