(Jesse Colombo, Money Metals News Service) Like last summer, gold is moving sideways as it works off its overbought condition following strong spring gains. There are many parallels between then and now—an encouraging sign.
In this article, I want to share an update on where gold stands when priced in multiple major currencies—a valuable perspective that offers deeper insight into its current position and likely next moves. While this methodology is relatively simple, it’s remarkably powerful and often overlooked by most analysts. In fact, it has become something of a trademark approach for me and for this newsletter.
I predicted that once last summer ended and trading volume returned, gold would break out sharply and extend its spring rally—and that’s exactly what happened.
This summer, I’m seeing many similar parallels, which I’ll detail in this piece. So, let’s dive in.
Let’s begin with COMEX gold futures, which I find more insightful for analysis than the spot price—mainly because $100 increments in COMEX gold often act as key psychological support and resistance levels.
After briefly dipping below the $3,300 support level on Friday, gold has rebounded today—a positive sign, as I would ideally like to see it continue holding above that level.
In the chart below, I’ve removed all support and resistance levels except for the most important ones right now: $3,200 and $3,500. These mark the lower and upper bounds of the trading range that gold has been confined to over the past few months.
I view this as a healthy consolidation phase—gold is simply catching its breath after the strong gains it has posted over the past year. It’s perfectly normal for markets, including gold and silver, to quiet down during the summer months.
Trading volume tends to decline, and news flow slows as many financial professionals head off on vacation (some even summering in the Hamptons if they’re from Wall Street!).
Additionally, geopolitical fears have subsided somewhat in recent weeks after the U.S. and Israel struck various targets within Iran, which has taken some immediate pressure off gold.
However, the ever-growing U.S. national debt—which just hit a record $37 trillion—and a weakening dollar continue to provide strong underlying support for gold prices, as I’ll discuss shortly.
Back on April 22nd, I published an update titled “Did Gold Just Peak?” Several factors led me to raise that question, including gold’s rejection of the key $3,500 level on that day and the formation of a spinning top candlestick—a classic signal of market hesitation or a potential pause. In addition, gold was quite overbought and stretched to the upside, as indicated by various technical measures, including the Relative Strength Index (RSI).
The RSI, a widely used momentum oscillator, helps determine whether an asset is overbought, oversold, or in a neutral state, and it clearly showed that gold was due for a breather.
When I suggested that gold may have peaked, I didn’t necessarily mean it would experience a sharp pullback. Rather, I expected it to enter a period of consolidation to work off its overbought condition. Sure enough, that’s exactly what has unfolded, with gold trading in a range for the past several months.
The good news is that gold is no longer overbought, as indicated by the Relative Strength Index (RSI) shown at the bottom of the price chart. This indicates that gold has successfully worked off its excess and is now in a much stronger position to resume its rally—likely, though not exclusively, once the summer ends and traders (along with trading volume) return.
I believe we’ll have a clear signal that this consolidation phase is over when gold decisively breaks above the $3,500 resistance level—formed at the April 22nd peak—on strong volume.
Interestingly, if you look at the chart of gold from last summer, you’ll see that its summer consolidation also began in April under very similar conditions: it was overbought, a spinning top candlestick signaled hesitation, and Middle East tensions had started to ease.
It’s fascinating how history so often repeats itself in financial markets, offering valuable clues for those paying attention. I certainly hope this year’s summer consolidation ends the same way it did last year—with a strong breakout to new highs!
I also like to analyze gold priced in euros, as it removes the influence of the U.S. dollar and often provides a clearer view of the underlying trend. From that perspective, gold remains in a solid technical position, with the uptrend still firmly intact. The €3,000 level stands out as a key resistance, and a decisive breakout above it would be a strong signal that the next major leg of gold’s bull market is underway.
I also closely track gold priced in euros, British pounds, and Swiss francs, as this unique currency blend offers a clearer lens into gold’s intrinsic strength. Support and resistance levels tend to form clearly in this mix, making it a valuable gauge.
Although gold has pulled back to its uptrend line, which extends all the way back to the start of the bull market in early 2024, the broader uptrend remains firmly intact. Ideally, I’d like to see a strong bounce off this trendline, followed by a decisive breakout above the key 8,400 resistance level. That would be a powerful signal confirming that gold’s bull market is resuming in full force.
I’ve recently begun tracking gold priced in the World Currency Unit (WCU)—a composite currency based on the GDP-weighted average of the world’s 20 largest economies. In many ways, it offers one of the most balanced and accurate reflections of gold’s true global performance, which is why I’ve been paying close attention to it.
Gold priced in World Currency Units (WCUs) clearly demonstrates that its uptrend remains strong, with a well-defined trading range between 2,400 and 2,600 that’s important to watch closely:
I also closely monitor gold futures on the Shanghai Futures Exchange (SHFE), as Chinese traders have increasingly become a major force driving gold’s price action—including much of the bull market over the past year, as I explained in a recent report.
A look at SHFE gold futures shows that the uptrend remains firmly intact, though the metal is currently consolidating within a range between 750 and 820. A decisive close above the 820 resistance level should signal the start of the next major leg higher.
Gold priced in Japanese yen is also trading within a range, between 450,000 and 500,000:
Next, let’s turn to the gold mining sector, starting with the large-cap VanEck Gold Miners ETF (GDX). GDX recently broke out of a long-term triangle pattern that stretches all the way back to 2011—a major bullish development.
GDX also broke out of its key $42–$46 horizontal resistance zone in April, which is a very bullish sign. Since then, it has largely treaded water over the past few months, mirroring gold’s consolidation—a normal and healthy pause.
Assuming gold soon breaks out from its trading range, that move should help propel gold mining stocks and ETFs like GDX higher as well.
Finally, I want to provide an update on the U.S. dollar, as measured by the U.S. Dollar Index. The index has recently broken below the critical 100 level and has continued to move lower—exactly as I’ve been anticipating. This decline is providing a bullish tailwind for gold and silver, helping to offset the impact of easing geopolitical tensions in recent weeks.
Given the long-established inverse relationship between the dollar and commodities, a falling dollar is typically supportive of higher commodity prices. With the dollar’s trend now firmly down, this should continue to offer a strong boost for both gold and silver.
To summarize, although gold has been treading water since late April, I view this as a healthy consolidation phase—an opportunity for the metal to work off its overbought conditions amid the typically quieter summer period, when trading volume and news flow tend to slow across all markets.
The fact that this consolidation is clearly visible across numerous major world currencies further supports the idea that this is a classic, textbook pause rather than a sign of weakness.
If gold continues to follow the pattern we saw last summer, this sets up a very bullish scenario: last year, gold surged to new highs as soon as September arrived and trading activity picked up. I certainly hope to see a repeat performance—and I’ll be sure to keep you updated every step of the way.
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Jesse Colombo is a financial analyst and investor writing on macro-economics and precious metals markets. Recognized by The Times of London, he has built a reputation for warning about economic bubbles and future financial crises. An advocate for free markets and sound money, Colombo was also named one of LinkedIn’s Top Voices in Economy & Finance. His Substack can be accessed here.
