Gold Near-Term Outlook
Gold was due for a significant test of support, the beginning of which took place on Tuesday. The move down from $2089.2 retraced just over 50 percent of the move up from $1690.1. While this aggressive move down was bearish for the near-term outlook, the move up during the past two days implies that the decline will probably prove to be corrective of the larger scale move up.
It is too soon to call for the correction to be complete. However, based on today’s move up to fulfill the $2073 smaller than (0.618) target of the primary wave up from $1874.2, a larger test of resistance is expected tomorrow. Rising above $1973 will clear the way for $1991 and likely $2007. The $2007 objective is the equal to (1.00) target of the wave up from $1874.2 and the 62 percent retracement of the decline from $2089.2. Settling above $2007 would signal that the correction might already be complete and would clear the way for $2020, $2040, and $2065 early next week.
Nevertheless, given the number of reversal signals that were confirmed on the daily and likely the weekly chart tomorrow, there is a good chance that $2007 will hold, at least initially.
Conversely, should $2073 continue to hold and upon an early move below $1936 tomorrow, look for a test of key near-term support at $1913. Settling the week below $1913 will call for prices to fall toward $1885 and ultimately major support at $1845 early next week.
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.