Long Term Oscillator Points Towards Gains in Gold

A long term oscillator, known as the Coppock Curve, points towards gains in gold. Figure 1 is a monthly chart of gold with the Coppock Curve in the lower panel. The Coppock Curve is currently trading below the lower trading band that looks for statistically significant extreme readings over the prior 36 month period. The Coppock Curve has been popularized as a long term oscillator that has worked reasonably well at identifying bull signals in the Dow Jones Industrial Average.

Figure 1. Gold/ monthly

For the past 12 months, gold has been consolidating the nearly 100% gains that took place over the prior 2.5 year period from 2009 to mid-2011. Currently, we find the Coppock Curve in an oversold position and below the lower trading band. Prior instances (since 1998) of the Coppock Curve being in a similar position are noted on the chart. Long term price projections suggest that gold could make it to the $2500 level.  

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