Gold – Looking at the 20 year chart

Let`s have a look at the gold chart for the past 20 years. Looking back a decade gold has risen a massive 450% from $368 on 31 January 2003 to  $1663 on 31 January 2013. That`s a 450% return on the precious metal if you had held on to gold for the past 10 years. Applying the same time span ie 10 years prior to 2003, gold only returned 1% to investors who may have bought the metal on 31 January 1993 and sold it on 31 January 2003. So two decades of completely different results for those of us and like me who have been around for the last 20 years.

But for us  speculators, investors, economists, fundamental and technical analysts alike, who cares? The big question we all want answered is where is gold going to from here on. Can the charts give us any direction where or what gold is likely to do from 2013 onwards. I am a technical trader. My viewpoint is always to consult the charts for entry and exit points. But while I may stare at charts all day long that doesn’t mean I disregard the economic turbulence, safe haven status, credit crunch crisis, dollar weakening and quantitative easing that has gone on over the past 10 years that has caused this meteoric rise.

The past 20 years of gold

 Gold has closed each year higher than the previous years closing price since 2001.

Gold reached higher highs in each following year since 2001 but failed to reach a higher high in the most recent 12 months being 2012.

So why is that significant, if at all to a technical trader?

It`s significant to traders looking for a way to trade gold in 2013, which is why this year will throw out some important support and resistance points to gold traders which to me make the most technical sense.

1) Gold did not make a higher high in 2012 by failing to break the previous year’s 2011 high of $1920 .

That is significant because for the 2012 trading year , no new technical breakout or higher high occurred after doing so for a decade. Gold, by it’s previous years standards of setting higher highs every year for 10 years with out fail, had a stable but weak year in 2012.

2) Gold in 2012 found support at $1527, and as a trader in 2013, I will be marking that level as a key support level since gold has never breached the previous years low going back 10 years prior.

My viewpoint for gold for 2013 is that gold needs to breakout the high of 2012 at a resistance level of  $1796 or breakout the low of 2012 at a support level of $1527 for a bull or bear case to materialise.

As the 2012 trading range for gold was $1527 to  $1796 a 2012 midway trading point for gold based on the last calendar year  is $1663.

On 31 January 2013 gold closed at $1663.

Therefore my position on gold one month into the new trading year is exactly Neutral.

I don`t believe after one month into the trading year of 2013 that a bull or a bear setup for gold has begun.

Are you bullish or bearish on gold for this year? Please feel free to comment.