The June breakout above $1370 signaled a new bull market in gold. The initial surge took gold to $1442.90 before prices entered a running consolidation. A “running consolidation” has an upward bias due to enthusiastic buying versus a traditional downward sloping correction. Monday’s close above $1470 registered a short-term breakout, and this wave higher should test $1500 – $1525. From there, I suspect we will see a more profound multi-week correction.

The monthly chart shows stiff resistance surrounding the 2013 break down near $1525. That area (give or take $25.00) should keep a lid on this advance and trigger the next correction. A correction from $1525 could be sharp, the commercials have built a rather large short position. Any pullback would be a buying opportunity, in our opinion, as we believe the bull market is just getting started. Note, the record volume confirming June’s breakout.