Will it be three times lucky for gold at 1 800

During 2011 the price of gold had set the stage for reaching the $2,000 per ounce level.

A spectacular rally from the February low of $1,336 led the commodity to reach a high of $1,934 by August before retreating lower. A gain of over 44% in just six months raised hopes of seeing the psychological $2,000 level being reached by the year end. In fact some analysts believed that gold could reach a high of $5,000 per ounce.

Instead the metal pulled back to its 62% retracement level to a low of $1,560 and then rallied another 16% to reach $1,815, creating a lower high. This was the first attempt for gold to break past and attempt to sustain the $1,800 level.

Gold Weekly

This year, gold has had a further two attempts of breaking past this level. March 2012 had seen gold reach $1,800 which then created a second lower high once again at a key level.

More recently during October we have seen the third attempt for gold to break past the $1,800 barrier but notice that the metal has created a third lower high which may suggest that the price of gold struggling at the resistance level may be a cause of concern for the Bulls.

For gold to move higher this third attempt will need to prove that it has momentum to lift the commodity higher.

Typically when markets fail to break past a key price level on three occasions which is referred to as a ‘triple top pattern’ then traders may expect to see a pullback which could bring gold prices down towards $1,695 as a minimum.

Right now gold will need to prove itself by clearing past $1,800 – $1,815 to then tackle previous highs and reach for the key $2,000 level.

A failure at the $1,800 level followed by failure to hold the $1,695 level could set the stage for lower prices into November and possibly even December which could take gold prices as low as $1,635 before it finds further support.