Gold surged higher yesterday, breaking out above the top boundary of the uptrend channel and climbing as high as 1485 overnight. Gold has since fallen back into the channel and is now trading over $20 off the overnight highs at 1464.
The market has reached the 61.8% retracement level that we identified as a probable resistance area and is now falling back. We maintain that this rally is a correction to the huge falls last week and further declines are likely in coming weeks.
A move back above 1525 would change our view, though we would not change our stance to fully bullish unless or until we break 1800. There are too many online commentators proclaiming the bull market alive and well, despite the huge technical damage done with the recent sell off - we cannot take such a view point with gold below 1525.
Yesterday, oil, silver and the industrial metals all surged powerfully higher along with equities, though oil has now also reached the 61.8% retracement of the recent decline and has found resistance there.
Further weakness in these assets, alongside a strengthening dollar, will suggest deflation, as commented in this blog in the early part of the week. This danger has not gone away and until gold breaks 1525, oil breaks $98 and the industrial metals move out of their downtrends, the markets clearly see a heightened risk of deflation.
Today's video for subscribers looks at yesterday's trading in more detail and our strategy for our next trade.
The market has reached the 61.8% retracement level that we identified as a probable resistance area and is now falling back. We maintain that this rally is a correction to the huge falls last week and further declines are likely in coming weeks.
A move back above 1525 would change our view, though we would not change our stance to fully bullish unless or until we break 1800. There are too many online commentators proclaiming the bull market alive and well, despite the huge technical damage done with the recent sell off - we cannot take such a view point with gold below 1525.
Yesterday, oil, silver and the industrial metals all surged powerfully higher along with equities, though oil has now also reached the 61.8% retracement of the recent decline and has found resistance there.
Further weakness in these assets, alongside a strengthening dollar, will suggest deflation, as commented in this blog in the early part of the week. This danger has not gone away and until gold breaks 1525, oil breaks $98 and the industrial metals move out of their downtrends, the markets clearly see a heightened risk of deflation.
Today's video for subscribers looks at yesterday's trading in more detail and our strategy for our next trade.