A Double Bottom for Gold?
If downtrend gets taken out, this correction is over.
Spot gold is now up over $18 and is nearing its near-term downtrend on the charts. As I noted on Friday, sales of the yellow metal on the gold ETF (GLD) have only come at capitulation points for gold since the Fed began to explode its balance sheet back in September of 2008, when investor demand for the yellow metal accelerated. And we obviously had one of those capitulation points on Thursday and Friday of last week.
In light of that capitulation, odds are that the metal has double bottomed on the charts if this downtrend is taken out sometime over the next few days. If so, then odds are that the correction since the February peak is now over, which sets up another near-term attempt at breaking out above $1000.
I'd also note the near-unanimous number of "hate mail" posts on the article above, which are rather telling with respect to the overall bearish sentiment that currently pervades the gold market, are also very constructive for a rally.
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Lastly, I found it somewhat noteworthy that after having plunged well below "1" during the first couple months of the year, the SPX/Gold ratio bounced back up to nearly exactly "1" on Friday and appears to have failed there as of today. I discussed this in Friday's Buzz.
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