After a brief surge over $2,000 per ounce last summer, gold has been a lackluster performer in the past year – especially when compared to cryptocurrencies and technology stocks. The yellow metal is down approximately 15% since its peak in August 2020, when the coronavirus pandemic was still raging. Despite its disappointing performance in the past year, basic technical analysis shows that gold’s long-term trend is still up.
First off, here is the daily chart of gold over the past year:
Though gold’s daily chart doesn’t show much of a discernible trend, the weekly chart is helpful for identifying longer-term trends. According to this chart, gold’s uptrend that began in early-2019 is still intact because the metal remains above the uptrend line that formed at that time. Gold’s weak, choppy performance over the past year has created a consolidation pattern that could have bullish implications if the metal is able to stage a convincing breakout above the pattern. Of course, it is important to beware if gold breaks below its consolidation pattern and uptrend line, which would be a bearish sign.
Gold’s monthly chart shows that an even longer-term uptrend that began in the early-2000s is still very much alive:
Though many pundits are souring on gold in favor of more exciting performers, gold still has long-term technicals and fundamentals on its side. From a fundamental perspective, global governments and central banks continue to gorge on debt and print astounding amounts of paper money, which is a trend that will not end any time soon now that the global economy is so hopelessly addicted to stimulus. The inevitable dilution of the value of paper money can only benefit hard assets such as gold and silver in the long run.