The gold price continues to consolidate in a large range under its all-time high and probably needs more time before making an assault on the $2000 barrier. The chart since the 1923.70 peak is bearish, but the large patterns are defective and probably do not give us actionable targets. The long-term supporting trendline from the 2008 low, which tags the late 2011 low, should be borne in mind: it is currently around 1575 and will reach 1600 in mid-April. The late 2011 low of 1526.20 is another support level to watch, as are the prominent lows of mid- and early 2011. The medium-term picture is dominated by last week’s plunge, with the initial bounce giving us a 1623.40 target. The near-term prospects are perhaps mildly bullish, however, as the market is oversold and has been drifting higher from the recent 1663.40 low. A rally above 1702.30 would prompt us to view 1663.40 as the new “B” point for the pattern, which would then require some downward follow-through to confirm a new “C”. If the prominent prior high at 1692.50 can be surpassed, the bulls will set their sights on the priors above $1700, which are numerous up to 1740.00. Above there, however, is the sheer wall of last week until 1776.10, a level which we do not expect to see in the very near future. The abundance of nearby prior highs should provide traders with bullish camouflage set-ups. But such long positions should not be treated as “investments,” as there is probably more downside coming before long. (Posted by Doug “harry” McLagan)
