Quoting my Oct. 16 Gold Trading Alert:
On the above chart, we see that gold moved to – and even a bit above – its 1.382 Fibonacci extension based on the 1999 – 2011 bull market.
It’s also at – actually a bit above – the upper border of its very long-term, rising trend channel. All this while being extremely overbought. And while the USD Index is just waiting to soar.
All this creates a situation in which all those recent big gains can be reversed shortly and followed by even bigger and more volatile declines.
Remember – we saw something similar in 2011 and back then silver erased two months of gains in one week.
Gold is now “just” $200 lower than it was when I had written the above and given the monthly reversal that is about to form, the really big declines are just ahead. This would perfectly fit the scenario in which the USD Index rallies profoundly.
Summing up, gold had a magnificent run-up and so did silver, however, it seems that this rally is over. Fortunately, this creates unique opportunities.
Thank you.
Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®