We update our forecasts one predictable leg at a time, with targets that tend to work very precisely. (Click here if you’d like to verify this claim for yourself.)  And while gold may indeed be on its way to $5000 an ounce eventually, as some believe, or to $1000 or lower, as others are predicting, we find it more useful to traders and investors alike to focus on realistic targets and shorter time frames. Ultimately, no matter how compelling the logic behind a forecast, none of us can truly “know” where gold will be trading in six months, or in a year, or a decade. What we can know — in this case, with about 90% confidence — is that the June Comex contract will soon be banging on the 1487.90 (this corrects chart error) we’ve been drum-rolling here for a while.  We should also allow for a possible counterthrust from 1495.80.  This number is not a margin-of-error alternative, just a lesser ‘Hidden Pivot’ where bulls could conceivably dig in their heels.

The coordinates yielding the higher target are shown in the accompanying chart, along with a corresponding ‘midpoint support’ where price action thus far has more or less corroborated the accuracy of the lower number. Will 1485.60 be as bad as it gets? Although we can make no guarantees, it looks like a compelling spot for buyers to arrest a bear cycle that has been savaging long-term investors since early October.  Another possibility is that the target, a Hidden Pivot support, will get steam-rollered by the decline. This would imply, not that the pivot didn’t ‘work,’ but that the selling was strong enough to overcome it.  Our new target in that case would be 1414.50, and because it is the terminus of a bearish pattern even bigger than the one that yielded 1485.60, we would be even more aggressive about buying there.  Tight stops are routine for us when we do these trades, since even a relatively modest breach of a Hidden Pivot target — here, by $2 to $3 — would be warning that the selling onslaught is not yet over.