Yesterday’s forecast for Comex Gold caught the low of a $13 rally to the exact tick, 537.80. Because this occurred after midnight in New York, I was somewhat surprised to hear from a couple of subscribers who nailed the trade, using a suggested 0.90-cent stop-loss that proved more than adequate. Both bought the bottom and then proceeded to turn a routine bottom-fishing gambit into an act of cool daring:  “I went long at 538.10 in overnight session and placed a stop loss to risk only about $120,”wrote Lawrence Towner. “Got home from work and exited at 550.30 for a cool $1,220.  Since I can't fish, I'm very glad for the advice.” Substituting a couple of mini-contracts for the full-sized, the other subscriber, David Fourie “had two fills when I awoke! Got out at 544.0 on both after sleeping through the 548.0 high. An easy $438 , having risked $54 plus commissions.”

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Cupla nice notes, really, especially since my mailbox was not exactly inundated with Valentines. Now the question is how long the 537.80 low will survive. Any bounce in gold that achieves $13 of gains in less than 24 hours is certainly a good start on a direction change. It recouped almost 40% of the steep drop begun a week ago from 572.30. But I’d feel more confident about it if the recovery were to close above 559.12, the 0.618 Fibonacci, or better yet, above the peaklet at 563.80 made last Friday. That would create the kind of robust impulse leg that could easily power the futures to new highs. Regardless, having banked a nice piece of the move we can relax a bit while uncertainties play out in metals bourses around the world. If the pullback has further to go, the most logical targets I can come up with are 559.10 or, worst case, 528.20. They represent, respectively, a 50% retracement of the rally leg begun from 496.50 just before Christmas; and a 0.618 correction of same.