Gold spiked last night and into the early morning hours - up as much as 100.00 before falling back. The question now is will gold continue to advance higher? Is this is a new phase in the advance off of the under 1,050.00 lows or not?

It would be difficult to say with certainty whether or not gold will move higher, but, coincidentally, we recently made some calculations based on the 64-year gold cycle that Martin Armstrong has pointed out.

Those calculations (ours, so don't blame Armstrong if these are in error) showed that, based on a low of 1046.20 (could be a little less depending on which numbers you use) that the first significant probable advance could reach to around 1324.14. As this is being written gold is sitting near 1325.00.

After that, the next level would be 1499.69. With all of the unpredictability and volatility within the political and economic realm it would be foolish to say that 1499.69 can't or won't be reached. It is a potential level based on a 64-year gold cycle.

However, the counter-argument is that the gold price is getting stretched. Unfortunately, we don't have a chart on this, but if you download the ChebTrendLite app for the iPhone and look at the Chebyshev Indicator along with the Supercycle on a monthly basis, the gold price is the most stretched it has been since 2011. You might remember what happened to the gold price in 2011 - it dropped and continued to drop all the way into this year.

Gold Forming a Right Shoulder?

It is also possible that gold is forming the right shoulder of a head and shoulders top. That would by in sync with what the Chebysev Indicator points to on a monthly basis. Markets, of course, can see prices stretched to extreme highs and lows for extended periods of times, and some might argue that gold is stretched too far to the downside rather than the upside. However, just looking at the market technically, it seems likely gold is stretched to the high side rather than the low side.

Another aspect of our Gold Master Chart that we have pointed to over and over again is the tendency of the gold price to turn at or near where the chart indicates it should.

Recently price has been held in by the fib circle (black curved line) and the bolded Pitchfan (combination pitchfork / Gann Fan). Both the Pitchfan and fib circle are ways to measure Alan Andrews' Action-Reaction Principle. There are simply certain mathematical relationships that indicate the potential moves both higher and lower before price moves back towards some level between the extremes.

If we apply Action-Reaction to the gold price long-term, it is visually quite stunning how far it has moved above what its previous historic highs had been.

If you look at the chart above, you may notice that the same blue Pitchfan line where the gold price made its final last gasp highs in the 1980's also is the same line that could mark the top of a right shoulder. These Pitchfan lines work as they are based on Action-Reaction - and while some may criticize them and whine that there are so many lines on the chart - they would do well to recognize that the lines are extremely useful to see the points of support and resistance over many years. This is something that can be difficult to achieve by merely using straight "arbitrarily" drawn lines from one price point to another.

What If

An important what if to consider is what if the gold price moves between 1416.00 and 1593.00. Well, if that happens then, visually price will have broken back into what now looks like the head of a head and shoulders pattern. Certainly, somewhere within that range one has to consider the possibility that the gold price could potentially push to new highs. Again, based on Armstrong's 64-year gold cycle, the gold price would need to break above and hold 1968.13 in order to hope to sustain an advance higher.

Conclusion

With the increased uncertainty, provoked and enhanced in part by #BREXIT the gold price spiked. It remains to be seen whether or not the momentum higher will continue or if the gold price will reverse lower. Based on Martin Armstrong's 64-year gold cycle, the price bounced from a low of 1046.20 to over 1324.14. The next significant level higher based on the cycle would be 1499.69. However, at that level we would have to consider the possibility that the head and shoulders pattern that appears to be forming in gold has been broken. However, if a right shoulder plays out, then based on the cycle the gold price would have 768.26 as a first major target. This price is largely in line with what the Chebyshev Indicator in combination with the Supertrend indicated.