Correction expected in Gold
On the 3rd October, gold exhibited the break-out under the 1310 that I had long awaited, and initiated a very strong downward movement with a great deal of momentum. This downward movement has met its end for the time being in the support area around 1250. The region around the 1250 was a fiercely contested spot for many months, which is why a retracement is now very likely.
From the perspective of the chart, a setback in the region of the 50% retracement can now be assumed. The area with the last significant lows on the daily chart at 1305 would also be possible, and would not really change much in the short-term bearish scenario.
This would make the price target of the correction the price area of 1295 to 1305.
The COT data is now also speaking in favor of a small recovery in the gold price. As expected, the funds and hedge funds broke down a large part of their short positions during the sell-off in gold at the beginning of October. Similarly, the commercials also dismantled a good portion of their long positions. With this, for now, we are moving away from the extreme values in the commercial index that have provided us with the clear short setup over the last few weeks.
The monthly chart continues to run within a clean downwards trend channel, even after the triple-wave upward correction of several months. Until gold sustainably goes above the last high at 1390 and breaks out of the channel, therefore, the downward trend will remain intact. Thus the long-term targets are once again in the area of 1100 dollars.
Short-term long trades can be built up until the target area of the correction around at 1300 dollars. After that – or if the correction fails clearly in smaller price zones already – then in terms of the chart, short positions are more advisable for longer swing trades. However, one should also keep a close eye on the positioning of the commercials and the large specs in the coming weeks. If these positions take on extreme values once more, then there will be much clearer signals again!
Until then, I wish you successful trades.
For presentation purposes the trading software “AgenaTrader” has been used.
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