Gold and the S&P 500 seem to be having the same problem, momentum wants to take them higher but the volume just hasn’t been there. As the S&P 500 chart shows, the RSI has been rising while On Balance Volume (OBV) has been hitting a ceiling. You may remember I had previous looked at these two indicators on June 5th when they produced a positive divergence against the index, which took the S&P from 1278 to its current level of 1324. It also appears that the 10-day moving average (blue line) has done a decent job of providing some support over the past three days.
Like the S&P, gold seems to ‘want’ to go higher, but buying volume just keeps declining, impeding gold’s chances of appreciation. When looking at the moving averages that have come into play recently, the 50-day and the 300-day (previously discussed here), which had been a level of support, now acts as levels of resistance. Just like the S&P, gold needs to see stronger volume to the upside before it’s likely to stand a chance at breaking past these two resistance areas.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.
