The bear market target at 1028.50 proffered her yesterday is a good bet to be reached, in my estimation. There will be stops along the way, of course, including the one at 1182.60 shown in the chart, and some fleeting bounces. Yesterday’s low got within $3 of the green line, and it’s possible sellers will close the small gap that remains on Friday. More important, however, is that the June 28 low at 1187.90 has been breached. This is not necessarily disastrous or even short-term bearish. In fact, the opposite should obtain, at least for a short while, since many bulls who were hanging on will have stopped themselves out on the dip to a new bear-market low. The effect would be to lighten the load for whatever rally is about to occur. Considering the importance of the low that was exceeded, and the number of die-hard bulls this must have spooked, I’d expect a rebound of perhaps $40-$60. Any less would imply that gold is even weaker than we might have imagined, and that the next leg down will be steeper than we’ve experienced in a long while.
GCG14 – February Gold (Last:1193.20)
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