Gold’s a touchy subject in the blogosphere.  I have nothing against stacking.  Holding some of the shiny metal — whether for fun, inflation protection or the coming zombie apocalypse — probably makes sense.

But, it’s the GC futures we concern ourselves with, here. And, most serious gold bugs will tell you that the futures and ETFs are not the real thing.  I get it.

Central banks have been hammering it for years, trying to convince investors and preppers alike that it’s not worth holding and, in any case, is not a viable substitute for those pretty pieces of paper they print down in the basement.

It’s not hard to see when they came to realize that gold’s ascent was a problem.  The only challenge has been figuring out when and where it’s going to bounce along its path.

In our last update with GC at 1145, we noted it had the potential to break above a TL from last January and tag 1178 or 1198.  It did break out, reaching 1191.70 about two weeks later.

But, then it fell back through that TL to another in a long series of new lows — confirming what everyone who charts it suspected: it’s just as manipulated as everything else.  That doesn’t mean, however, that there aren’t some good trading opportunities ahead.

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GC just bounced for the 4th time off the bottom of the purple channel shown below.  But, it’s pretty easy to imagine the falling red channel as having the greater influence. The red channel would obviously indicate more downside.

The Fibs haven’t been all that helpful in predicting turns over the years, but the recent bounce at the .500 was good for about $100.  So, we’ll acknowledge the dip back below and backtest of the .500.  From a Fib standpoint, the next stop would be the .618 at 892.40 — last reached in May 2009.

Trading GC has been as simple as buying every tag of the purple channel bottom.  Of course, there will come a day when that doesn’t work any more.  And, the drop will potentially be violent.

With the first fed funds increase since June 2006 presumably arriving in two days, we can expect some pretty wild gyrations in the “markets.”  Personally, I’d not want to be long or short GC during this period.

But, the weakness in DX since Dec 3 suggests there’s a decent chance of the Fed punting.  If DX plunges further, as I expect it will, GC’s 4th bounce could be a doozy: 1150-1180 for starters, and 1286 after that.

If, as nearly everyone else seems to expect, DX breaks out — I would want to be short GC with the psychologically important 1,000 level in mind.  If/when 1,000 falls then, as noted above, the next major support is way down at 892.40.

GLTA.