Gold (GLD) near-term outlook
In the Sep 6th email, said there was some potential that a more important top was in place at the Aug 27th high at 137.55 (June high, 38% retracement from the Oct high at 174.07, approx $1434 in gold), and with a month or so of declines all the way back toward the Jun low at 114.68 ($1179). The market has indeed weakened sharply since, breaking back below the key 130.30/131.30 area (multiple lows since April), and increasing the likelihood of declines back toward that 114.68 ($1179) low. Note too that technicals remain weak (see sell mode on the daily macd at bottom of chart), and the US$ index is seen forming an important bottom (see email from Monday, inversely correlated), supporting this view of further weakness in gld/gold. Nearby support is seen at 126.00/25 (50% retracement from the 114.68 low), while resistance is again seen in the whole 130.30/131.30 area, and the bearish trendline from Sept 3rd (currently at 132.75/90).
- Strategy/positionStill short from Sept 6th at 134.07 and for now, would stop on a close 25 ticks above that bearish trendline from Sept 3rd (cur at 132.75/90). But will also want to get more aggressive on further weakness, as the magnitude of big picture declines is seen limited (see longer term below).
- Long-term outlook
No change, as trade from the Jun low at 114.68 is seen completing the whole fall from the Oct 2012 high at 174.70, and with at least another few months of wide ranging/ consolidating ahead. Note that the decline from last Oct lasted about 8 months with the recent consolidation from June lasting a little more than 2 (so far), and is likely not long enough "time-wise" (they will often tend toward equality). Additionally, the seasonal chart moves higher through the end of the year (see 3rd chart below), while the long discussed, longer term support lies just below the June low at 114.68 at 113.00/50 (50% retracement from the Feb 2005 low at $41.02), and adds to the view that further declines would likely be part of a larger, multi-month period of wide ranging/consolidating (see in red on weekly chart/2nd chart below). Strategy/position: Also switched the longer term bias to the bearish side on Sept 6th, but will be watching for signs of an important bottoming on further downside and especially an approach of the June 114.68 low.
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