Yesterday we mentioned the importance of the $1650 level for gold bulls; intraday price rallied to $1645 spot and $1650 on GC before aggressively selling off. This should be seen as a sign that caution is merited.
We also suggested keeping a long view of the fundamental economic backdrop in mind when holding metals for the very long term. In that spirit, the below chart is a technical view of the monthly gold chart, with the 50-month MA applied.
In this trader’s opinion, the picture above reinforces the need for caution if engaged in actively trading the commodity. It is clearly visible that a close below the 50-month MA puts the price in peril of further rapid declines. However, and again, given the fundamental economic backdrop, the market would likely see irrational declines in paper prices (which could be dragged down with all asset classes a la 2008) as a major buying opportunity, perhaps especially for the physical metal in bullion form…
Thanks and have a great weekend.
