Gold was modestly higher in early trade this morning. Yesterday it continued to sell off from the record high of $3,500 hit early last week. It came within a couple of dollars of $3,200. This level held as support, passing its first test.
This should offer some encouragement for the bulls, particularly as the daily MACD has fallen sharply and is now less overbought than it was last week. That’s not to sound the ‘all clear’ for the bulls.
Gold still needs to blow off some of the froth from the last leg of its strong rally. But it’s possible it could achieve this, and reset the MACD to more neutral levels, through an extended period of consolidation.
Source: TN Trader
If it can manage this without another significant leg down, long-term gold bulls should happily take that as a victory. Such a move has the potential to set the scene for a fresh leg of the rally, which, given sufficient momentum, could take it to fresh all-time highs.
The alternative is that the high is already in, and any rallies should be used as opportunities for existing bulls to cut their exposure. Unfortunately, it’s just not possible to say with any confidence at present which is the most likely outcome.
