Following Gold's steepest declines in over 6 months, bearish momentum is beginning to wane.
Whilst I have included the bearish channel, overall I doubt this one will hold. Firstly we have a higher low in November '13 (look closely) and the subsequent bullish run traded above the prior swing high around 1360 to suggest a new trend is on the way.
The sell-off from the 1392 just over 3 weeks ago was deeper and faster than many bulls expected, but we do appear to be forming a base above 1273. Last week formed a small-bodied bullish hammer to suggest near-term strength and currently trading just above the round number of $1300.
Bullish Hammers are not magic and merely suggest a weakness to the preceding move. I am open to the possibility of a deeper retracement down to the 61.8% level, but for now at lease my near-term bias is for a continued bullish run.
We have several key data releases this week which should help move things along which include FOMC minutes, China CPI/PPI and G20 meetings over the weekend.