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| Daily Spot Gold |
Since topping above $1900 in early September 2011 Gold has eventually formed what looks like a very large descending triangle. Sometimes these patterns break on the upside but much more frequently the flat bottom and downward sloping upper trendline pattern eventually breaks to the downside.
Should Gold clearly break below $1520 the downside target is massive. The distance of the move is usually the width of the triangle. For Gold that would mean close to a $400 drop to around the $1120 to $1130 region. And that could happen quite quickly.
Fundamentally it's very hard to find many Gold bears out there which makes the potential for a large fall even more likely as the speculative market is long to the gunwales. I also very much favour a much more severe deflationary environment still to come before any reflation emerges.
1 comment:
thank you for your objective honesty about gold's current technicals. I'm still bullish but willing to acknowledge a potential painful downside before the trend continues up.
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