The debate over where gold prices are headed has been a active one, with the bulls maintaining that fears of a slowing global economy will keep demand for the safe-haven investment strong; while the bears argue that the current price of gold, which has limited industrial use, is unsustainable in the long term.

From a chartist perspective, we're looking expecting a bullish scenario in the long term, but not without some selling pressure in the short term.

CLICK ON GRAPH TO ENLARGE Gold Comex Daily

The daily comex gold chart shows three significant patterns. The first pattern is the parabolic trend seen from October to December in 2009. The rapid rises were unsustainable, and the move to the right of the parabolic trend line led to a sudden and severe collapse, causing the price to lose 13% very quickly.

The recovery from this fall leads to the second pattern, which is the inverted head and shoulder pattern developing from December, 2009, to March, 2010. The pattern was used to project the next price target - $1,249 - which has been achieved.

The behavior of the gold price after this target has created the third pattern - the upward sloping triangle. This started with a horizontal resistance level near $1249, which was also the price target for the inverted head and shoulder pattern. The second part of the triangle pattern is the sloping trend line. This trend line defines the price rise starting in March, 2010.

This trend is important and a fall below this line indicated significant trend weakness, and the tumble to $1,206 was a clear downside break below the trend line.

The third part of the triangle is the vertical base. This is created when the price collapsed in May to $1,177. The height of this base is measured and the value is projected upwards, giving the next breakout target - $1,319.

Based on this analysis, where are gold prices headed?

The recent price activity is near to the apex of the triangle pattern. Gold has moved above the $1,249 level twice, but the breakout strength has not continued, which indicates bearish reaction with cautious traders taking profits. Measuring the height of the base gives a downside target of $1,160.

But while prices may weaken in the near term, the underlying trend is strong, shown by the separation in the long term group of moving averages in the Guppy Multiple Moving Average indicator.

This suggests investors are strong buyers whenever there is a fall in the gold price, and that will continue to lend support to the market.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders –www.guppytraders.com . He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.

If you would like Daryl to chart a specific stock, commodity or currency, please write to us at . We welcome all questions, comments and requests.

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