Last Updated : March 12, 2010 10:50

Gold likely to pull back for another good entry point

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By David Banister
Last August I wrote a piece for 321 Gold about preparing for a monster rally up in Gold and Gold stocks. At the time, Gold was hovering around $900 an ounce and I was looking for $1225-$1250 ranges in a “C” wave up. Gold had consolidated into a “Triangle” pattern according to my views, and therefore it was evident a breakout could occur at anytime. The HUI index roared ahead into early December and Gold rose to about $1,220 US and peaked out. That was the end of the C wave rally in US Dollar terms.

From that point, I was looking for $1070 as a likely pivot low, with a possible drop to $1040 ranges. In January, I updated those forecasts with a Kitco article looking for 102.50 to hit on the GLD ETF, which would indicate about $1,040 US for a pivot. The following day that pivot low hit and Gold surged past 1070, and up to the 1140 ish highs recently. This is indicative obviously that the correction completed around 1,040 which was a shallow 31% Fibonacci retracement of the A B C wave rally to $1220 from $681.

That brings us to another update on Gold today. Below I present two charts, one is a daily chart showing a close-up view of Gold, and the other is a weekly longer term chart view. In short, Gold continues to look great for a move to $1,325 which is my latest forecast for a pivot topping area. However, it is overbought near term and I’m looking for $1090-$1,110 window (US) as the rough bottoming area.

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Gold has moved above the downtrend line intersection in January solidly, and being overbought, should pull back for another good entry point. I have been bullish on Gold since Nov 2001 and remain so, but there are times to be reducing positions and times to increase positions. Right now it’s pretty neutral with a pullback required.

The intermediate target should end up topping around 1300-1350 ranges US, and then I see a correction taking Gold back into the $1100 range again, but I like to take things one step at a time. If you're interested in more frequent updates can you review TheMarketTrendForecast.Com which I recently launched, and if you are a trader, take a look at ActiveTradingPartners.com.