How far can this break out higher in gold take us?

Fundamentally, after a brief period of consolidation in the gold (COMEX:GCN14) market, how long can this bullish breakout take us?

From what I am reading here today it is problems everywhere from Europe to the Far East to the Middle East that could be causing the break out in the gold markets. Currently at the time of this writing July 10, 10:36 a.m. I have a high in the October gold of $1,347/ounce with the market up $14.30/ounce at $1339.30/ounce. So at one time we were up over $20/ounce on the day.

The problems in Europe as far as I can tell are coming from one of Portugal's largest banks and some serious debt concerns. According to one of my favorite fundamental new sites Bloomberg, "Portugal's central bank said Banco Espirito Santo SA is protected after its parent missed debt payments, Moody's Investors Service downgraded a company in the group citing a lack of transparency and links to other companies."

All in all, it sounds pretty shady to me. This in my view, just adds fuel to the fire of the sovereign debt issues in many of Europe's nations.

In terms of the Far East the Nikkei in Japan was off due to a weak economic report regarding machinery orders. Also China's markets were lower as well. Then of course we have the ongoing tension in Ukraine and the Gaza strip.
 

 

Daily October gold chart  (Chart by eSignal)
 

From a technical standpoint, right off the bat I see a break out to the upside after a period of sideways action. This to me is bullish. As they say "markets come out of consolidation the way they came in," and that is the case here as gold was moving higher before it settled into this consolidation mode. I have highlighted this consolidation area on the chart below by using two royal blue arrows.


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