SPDR Gold Trust (ETF) (GLD): Is It Time To Buy Gold?

Gold is showing signs of life after a rough 2013. Is time to buy atomic number 79, or is the yellow metal just shaking out before the next leg lower? Let's see what the charts have to say using iStock's 3T technical analysis technique.

As you can see on the chart below, Au is short-term bullish, but still had another hurdle to clear before establishing long-term bullish status.

On the bullish side, the yellow metal's price and its 12 and 26-day moving averages (MA) have crossed above the 50-day benchmark. It is positive for future price movements when the MAs line up with the shortest on top and longest on the bottom.

Longer-term, Gold is still below its 200-day moving average. As a rule of thumb, it is considered long-term bullish when prices are above the 200-day mark and bearish when below.

[Related -What's the Game Changer for Gold?]

Building on our long-term view, #79's price pattern could be drawing one of two triangles. The only difference is the size.

iStock sees Gold moving up and testing the 200-day of $1,310 based on the combination of the short and long-term technical markers.

Part 2 of our 3T review shows that Gold is overbought. The price is more than three standard deviations above its normal 20-day trading range. It is a condition that can last from a day to a couple of weeks before encountering an expiration date; however, it always comes to an end with prices 1) retreating or 2) pausing for an extended period, but usually 1.

From our experience, prices fall back to the midpoint/20-day moving average, which would put gold on $1.260 and rising. Typically, the return trip to the 20-day is a good entry point on a pullback.

[Related -SPDR Gold Trust (ETF) (GLD): Why Gold Could Stage A Big Rally In 2014]

Finally, the 5 and 25-day rate-of-change (ROC) readings are stretching out to annual highs. This is a way of measuring momentum. Current readings suggest Gold is approaching a short-term high, and could be ready to stall; which confirms T2.

Overall: based on our 3T view, gold probably test its 200-day moving average, which it is doing today, then profit taking brings the stock to the 20-day, which could be in the neighborhood of $1,270-$1,280 by the time the price gets there.

Buyers should regroup at the 20-day and make a run at the top end of the smaller triangle, putting the price close to $1,350.