Gold Building A Base
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
After months of getting hammered, gold appears to have found the bottom when it hit $1,180 a couple of weeks ago. Gold appears to be building a nice base here and $1,190 looks to be a higher low that should hold, although the new range in gold appears to be $1,180-$1,240.
The healthiest move for gold now would be consolidation of a series of double tops and double bottoms, allowing gold to build a solid foundation for the next rally. There was a lot of damage done during the almost four-month sell-off. The only way to repair that damage is for gold to consolidate.
Dumb money is now carrying a record short position, while the big banks are about as flat or neutral that they have ever been. This kind of action will create a monster short squeeze at some point. For gold bulls, the best time for the squeeze is after gold has consolidated and confirmed the bottom. If it plays out that way, the metals could start a bull run.