Short-covering buying will catapult gold sharply higher. As specs rush to cover or face financial ruin, the much-larger long-side specs will pile on to chase gold’s upside momentum.
As for what the market will do, a tip-off might be if you get above the highs here at 1846.80, it might be the sign that we're finally breaking this bearing pattern.
The market has slipped back now from 2024.80 to 1824.60 — a $200 per ounce drop. That doesn't mean you should expect it to bounce. It's a bearish set up.
Gold has arrived at the outskirts of the massive $1820-$1790 buy zone. In addition to gold bullion, silver bullion and mining stocks can be bought there as well.
Gold has been holding up relatively well in the face of rising bond yields and dollar strength, but that may not last if Chinese investors slow purchases of the metal.
In a weekly chart of closes, gold is down $100 an ounce in very fast order. Very important though, is when a market is under this 18-week moving average of closes, you should have a downside bias.
In gold, we are on day four of a five-to-seven-day bloodbath phase. This produces a huge multi-week rally that I am convinced will give us the break out above 2090.
