Is The Bull Run Over In Gold?

When gold was in the upper $900s last month, I wrote that I thought it would fall to potentially $830.  It did indeed fall from $1,000 an ounce to around $860 an ounce.  Then we got the bounce back to about $940 an ounce.  Now, we’re seeing another round of selling.  The question is are we just pausing or is the bull run really over for the time being?

Today, we’re around $877.  Technically speaking, gold is definitely under some pressure.  There are some fundamental reasons including the dollar rising that could keep pressure on gold.  But, I typically trade gold based on the fundamentals because it’s much easier and it swings so much.  We’re at a key level right now for a couple of reasons:

  1. We’re at the same level we were earlier this month which should be a floor if it’s a correction, and
  2. A lot of traders have committed funds at these levels looking at the volume.

Based on my work, I believe gold will fall further.  Some of the many oscillators I watch are showing some character changes in recent weeks.  In addition, it’s been falling on heavier volume, the damage done in early March was for real, and for those technically oriented, I’m seeing a possible head and shoulders pattern.

So, where do I think it’s going?  If (and that’s an if) it doesn’t hold here, we’ll head down to $825 and then potentially $800.  Even that would only be a 20% correction from the highs.  It could easily do that and still be in a long-term bull market still.  Don’t forget that.

I don’t think that this is the end of the gold run.  But, certainly caution is warranted.  My buddy Richard Reiley has had a lot of cash in his gold & oil portfolio for some time.  I couldn’t agree more with that stance right now.

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