I know there are folks that hear the statement, ‘Sell Gold’, and receive it almost as an insult. Let me state for the record that I am not saying ‘Sell Gold’ to offend anyone or with the intent to be controversial.
I know there are a multitude of fundamental reasons to own gold. This article however, is presenting my analysis on why I’m forecasting lower gold prices in the near-term.
The chart below shows the story clearly. The breach of 1306 was the initial selling (shorting) opportunity, targeting 1272 and 1244, both of which were achieved very quickly in early October.
The bounce to retest 1306 and the high-volume area resistance at 1315 – 1330 at the beginning of November was the second selling (shorting) opportunity, targeting 1220 and 1199. These targets were, once again, achieved very quickly.
Finally, and most recently, gold has broken below support at 1191.5 – 1199 without managing any kind of a bounce or rally attempt. This leaves 1191.5 – 1199 as well as the high-volume area at 1218.6 – 1231.1 as overhead resistance and locations to sell (or sell short).
The next major downside target is 1092.5 – 1103.5. Only a move back above 1231.1 would negate this near-term outlook and transition gold out of its bearish position and open the door for a meaningful bounce or rally.