Gold Getting Ready To Make Big Move
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Gold has had a monster rally of almost $90 over the last 19 trading days. What looked like a breakdown turned into a great buying opportunity or a short squeeze. On Thursday, gold looked like it had the final blow-off to the upside on heavy volume, making a high at $1,327.30 in the February futures. Since Thursday, gold has traded slightly lower than the high but has stayed inside a $20 range.
Typically, when markets start to have consecutive inside days, the common theory is a big move is coming and usually that move follows the prevailing longer-term trend. Gold should move 4%-6% from where itâ€™s trading now. The move can be either way as the chart compresses as it gets ready to break out of this range.Â
We expect the move to be to the downside; the rally was more of a dead-cat bounce and a test of the lows is in order. We are watching the $1,328 level on a weekly basis. Until gold closes above that level, we will trade it from the short side. We are long-term bullish, short-term bearish.