Friday, January 9, 2009

Which way is gold headed?

Even gold is suffering a bout of schizophrenic insecurity this week. Today, the spot price is back up to just about the middle of $855, but the trend still points down.

“The bulls have bounced off normal primary support at $700 nicely, ” writes Ed Bugos, “and October tends to herald correction lows, seasonally speaking. Most of my leading indicators, including gold shares, moreover, suggest the low is in.

“However, until the last lowest high ($940) in the downtrend is cleared, we have to tame our enthusiasm. What’s more, the current rally has stalled at the downtrend line, which intersects the current time horizon at about $890.

“If the bulls can’t make it back up to at least the $940 high of September/October before the market falls back through $830, then I would worry the market MIGHT either retest its $690 low or go even lower.”

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