October Pegged as Cyclical Low for Gold
Technicals suggest the bull cycle itself won't end until 2013 or 2014.
Today we have gold trading around 1600 and my firm's recent forecast in May was for a rally into mid-June topping around 1620-1650 ranges in US dollars. The intermediate forecast still calls for a possible drop to 1445-1455 ranges this summer, the same figures I gave out last September for a Primary wave 4 low.
Only a close and a strong move over 1650 will eliminate the downside risk in my opinion.
Below we can see a weekly chart showing the 34-week moving average line as well as the obvious downtrend line. The 34-week moving average line acted as support during the Primary wave 3 rally from 681-1923. It now is acting as a resistance ceiling to break through, and I don't think we will until this fall.
The likely cyclical lows for this gold correction will be in the October window and investors should make sure they are positioned long by that time.
Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service.
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