There is little doubt that gold’s decline from $1742.6 is corrective of the larger scale move up. So far, prices have fallen to $1670.7 but have not been able to close below $1679. This is the smaller than (0.618) target of the primary wave down from $1742.6 and the 38 percent retracement of the rise from $1576.0. Nonetheless, there is still a good chance for the correction to extend to $1660 first, especially upon a move below $1670 early tomorrow. The $1660 objective is the equal to (1.00) target of the primary wave down from $1742.6 and the 50 percent retracement of the rise from $1576.0. Support at $1660 is expected to hold. Closing below this would call for a test of key near-term support at $1639.

The corrective move down will likely be short-lived, and once $1660 is met odds for a move back up will increase substantially. There is also a reasonable chance that the move down has already stalled and that prices will press higher before reaching $1660. Should gold overcome $1698 first look for a test of $1716. Settling above $1716 would strongly imply the corrective move down is over and would clear the way for $1479 and higher.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold rallied today as expected and overcame the $1623 target discussed in yesterday’s update. The move up is now poised to reach $1651. This is the 62 percent retracement of the decline from $1698.0. A close above $1651 would strongly suggest the move down is over. Closing above $1685, the 89 percent retracement and highest the wave up from $1576.0 projects, would confirm the move down is over and clear the way for $1707 and higher.

The move down from $1698.0 is forming a bullish flag that will have broken higher upon a close over $1651. Nonetheless, the move up from $1576 is due for a pullback soon, so there is a reasonable chance for a test of support before $1651 is overcome and almost certainly before gold settles above $1685.

Any move down will most likely be corrective and is expected to hold $1616. Key near-term support is $1601, a close below which would call for $1582 and possibly $1567, the latter if which is in line with the flag’s lower trend line.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.