While the equity markets are hitting fresh all-time highs, and appear a bit overbought/frothy, the gold market is re-testing lows from December 2011. Despite the recent bearishness in the metals space, we are beginning to see the formation of a triple bottom in the spot gold price. We’ve been range bound between $1,790/ounce and $1,550/ounce for roughly 17 months, experiencing a bearish triple-top (between Nov 2011 – Oct 2012) , and now a bullish triple-bottom (between Dec 2011 – April 2013).
While some may view upside momentum limited to simply retesting 1,790 (a move of approx. +15%), history will show that comparable formations rarely yield a fourth top. In the case prices rally up to the level of the three previous tops ($1,790/ounce), there is a good chance that gold will rally up higher, and re-test the record $1,900/ounce level of September 2011. The formations of triple bottoms usually occur during a major period of accumulation.