By David Nichols
dnichols@fractalpublishing.com

On Wednesday gold put up another in a series of nice, mellow bullish trading days, as it had little problem holding over $920. It’s even making some noise now like it’s ready to burst up quickly to $943, and then on to $970.

Even though this has been a grinding, up-and-down sort of pattern in the short-term, I actually like the way it’s been developing. Gold is doing the right things now to lay a foundation for a very strong move up later — and we might not have to wait too much longer.

$927 is an undeniably strong energy level for this pattern, and we’ve now seen gold bounce around between $920 and $927 for a few days. But the fact is gold has “ratcheted up” to this higher level after spending some time down around $910, and this is a sneaky way to get in shape for a strong breakout move.

The daily chart remains loaded with potential energy right here, and the daily fractal dimension is just starting to move down as prices climb higher, indicating a full-fledged daily up-trend is ready to launch.

There is also a full load of available energy on the weekly chart. This is a perfect sort of re-energizing pattern to launch the next growth phase. Gold has come back and retraced a good chunk of the strong move up off the bottom last year, while the weekly fractal dimension has moved to a very high level.

And let’s not forget the “big daddy” monthly chart, which has been charged up and ready to go for a while now.

So even though gold is in a bit of a grinding short-term pattern, in my opinion this is actually a good thing in this situation. As I’ve been discussing, if gold can continue to make short bursts higher, and then come back down to test the last breakout level — and do this all the way up to $990 — then it will be in position for a spectacular launch higher right as the summer gets started in late June or early July.

So for now let’s just let bullish positions ride, and ratchet up our stops to a breakdown under $910, as I mentioned in yesterday’s report. I’m definitely not expecting such a breakdown, but we always have to know where a trading plan goes awry and a re-assessment is needed, and right now gold should have little trouble staying over $910 if the expected bullish path is on track.