December Gold Futures

The pattern shown is sufficiently clear and compelling that we should use the midpoint Hidden Pivot support at 1126.05 as a minimum downside target for the next 2-3 weeks. The support is ostensibly very important, since its decisive breach would imply more downside to as low as 813.80.  That would be a far cry from the bullish tone change I said I was expecting by mid-October.  I based that on a conversation I’d had in August with Richard ‘Doc’ Postma, a regular guest on the Korelin Economics Report.  In the past, Doc has shown remarkably good timing in calling gold’s intermediate-term swings. In this instance, we agreed on several key points that appeared to favor an imminent upturn in bullion, including the ability of mining shares to hold their ground when bullion price have been weak. I am keeping an open mind about this, but even Doc has pushed back his timetable. He notes that rather than being a turnaround month, October could produce yet more angst for gold bugs.

This, too, is of course highly speculative. But rather than try to parse the logic of it, I’m simply going to trust my charts to tell me what’s likely. In this instance, I would say there’s an 85% probability of a fall to the 1126.05 target. If so, that would represent a drop of 7.4% from Friday’s settlement price. As for a further drop to 813.80, it would become an even-odds bet if 1126.05 is exceeded on a closing basis for two consecutive months, or if it is exceeded by more than $19 intraday. Alternatively, if a bull market is brewing, we should expect not only a robust bounce from within a few ticks of 1126.00, but one that clears the two labeled peaks without pausing for breath.