In our last update [see: Update on Gold, Aug 26, 2016] I noted that GC had come within 2.50 of our 1380 target (from Apr 8) in early July. After seven weeks of chop, it still hadn’t committed by either tagging the target or breaking down.
The way I saw it, its fate was tied to equities, the US dollar and oil. If CL rallied, DX could drop and GC was in a position to run up and officially tag 1380. If, on the other hand, our SPX analog from Aug 3 played out, GC was heading lower.
If our analog plays out, and stocks spike higher over the next few sessions, look for DX to lead the way and GC to tumble — if it’s led by currencies… And, I’d be remiss if I didn’t mention the huge IH&S Pattern, the neckline of which is the former high at 1307ish. If TPTB are serious about discrediting GC anytime soon, it’ll involve getting it back below that support.
As it turned out, DX was putting in an important bottom that day that would see it rally 8.4% in the next three months. GC bounced several times at 1307 before finally plunging below on Oct 4, shedding 14% as of today’s lows.DX recently tagged our upside target at 102.098, leaving many readers to wonder whether this is the right time at which to cover short positions.
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