In our Mar 4 Update on Gold, we identified 1286 as an important turning point.  It was one of two upside targets we had assigned on Feb 10, when gold closed at 1197.

GC topped out six days later at 1287.80, presenting a nice shorting opportunity.  By the end of March, it had tumbled a respectable 6.3%.

Since then, however, it has climbed steadily higher.  It begs the question: is this just a bounce in the midst of the drop, or are higher prices in store?

continued for members…

This is currently one of those situations that’s too close to call.  GC has retraced .886 of an .886 of a .500 of an .886.  It is a hair’s breath from breaking out, even though it’s in the midst of a downturn.

I’ll explain.  The white grid above is nestled within the red grid below which is nestled in the larger purple grid below.  And, it’s the purple grid that matters most.

The drop from 1287 fell from the white .886 to the white .618.  We draw the purple grid there, and note that the bounce to 1246 on Mar 30 represented a .500 retracement.  Some corrective waves, that’s all you get.

But, the subsequent drop (to a higher low) sets up a potential Bat Pattern to the purple .886 at 1278.50 — also a reasonable bounce for a corrective wave.

GC frequently trades in the same direction of stocks — the “all one market” theory.  But, lately, it’s maintained an inverse relationship — a result of growing fear.   So, it’s not surprising that it’s in the same situation as SPX — on the brink of a breakout or breakdown.If it breaks above 1246, then the purple .618 at 1257 is a gimme.  From there, we have potential resistance at 1270, which is also about where the purple midline currently resides.If it breaks above the purple midline, then 1379-1380 is the next logical target, perhaps in Sep/Oct.  So far, it’s been doing a nice job of rising the rising moving averages, with the SMA50 around 1220 coming into play the last few days.Note that the SMA50 would also represent a backtest of the red channel it recently broke out of.  If that doesn’t hold, then the white channel bottom around 1207 makes sense.

GLTA.