Unsurprisingly, this is exactly what happened - gold sold off all morning, finding support at 1590 before rebounding to close the COMEX session at 1604, seeing all of the 1600 puts expire worthless and the 1600 calls expire with a small payout.
We continue to form a series of higher lows and higher highs as gold climbs slowly but steadily higher. A move above 1620 will confirm that an intermediate bottom is in which should see shorts covering their positions and new longs enter the market.
On the downside, the "hammer" bottoms provide well defined support at 1590, 1577 and 1560, as well as key support at 1554. A move below this level would suggest further downside and a retest of major bull markt support at 1525-1530.
Oil continues to move higher and is now trading around $95, though equities appear to be forming a top. A reversal in the rally in equities would be supportive for gold, as investment capital has recently been diverted away from gold into equities.
Today's video for subscribers looks at yesterday's trading action in more detail and our strategy for our next trade.