Craig Coatney's  Instablog

August gold futures (GCQ2) has been consolidating just above a major supportive level of +/- 1525.00 (the December 2011 low was 1523.90 and the May 2012 low was 1526.70). (CQG graphics used for each chart)

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This consolidation has taken the form of a daily symmetrical triangle which has an amplitude of 106.60, and has breakout parameters of 1726.10 (bullish objective) or 1448.40 (bearish objective).

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1448.40 = The bearish objective if a daily close were to occur below 1555.00 for Friday (note that Thursday's low was 1554.40).

For confirmation, one can wait for a daily close below 1547.60, the June 28 low, and last low/3rd turn of the triangle pattern.

Trendline support arrives at 1555.00 for GCQ2 (1554.9810 without rounding for contract specs) for Friday and has a positive slope of 0.7381, so this trendline will arrive at 1555.70 (1555.7191) for Monday.

Long-term, if this 1448 level is reached, the next major supportive level would be down at the 1300-1310 level.

1449.00 = The 38.2% retracement of the October 2008 low of 681.00 (made on the December 2008 contract) to the September 2011 high (made on the December 2011 contract). This is close to the daily downside objective of 1448.40.

1302.30 = The 50% retracement of the same range mentioned above.

1726.10 = The bullish objective if a daily close were to occur above 1619.60 for Friday.

For confirmation, one can wait for a daily close above 1625.70, the July 3 high and last high/4th turn of the triangle pattern.

Trendline resistance arrives at 1619.50 (1619.5474) for Friday and has a negative slope of 0.8789, so this trendline will arrive at 1618.70 (1618.6685) for Monday.

1676.00 = The 38.2% retracement of the September 2011 high (made on the December 2011 contract) and the December 2011 low of 1523.90 (made on the February 2012 contract).

1723.80 = The 50% retracement of the same range mentioned above.

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Gold/Silver Ratio:

57.43 = Bullish channel support. See attached chart.

57.10 = July 3 low.

Even though silver has been more offered than gold (causing this ratio's rise), that could change with gold breaking below its triangular formation.

If this ratio trades below 57.00, then profit-taking can arise in this relationship, thereby exacerbating gold weakness.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: This was written Thursday at 3:30 pm CDT.