Short Term Outlook for Gold

Gold has had a major breakdown in price. We had a double peak formation with this past July's high and we were unable to break through. It happened that the global sell off came when we were poking at this resistance and caused a sell off. This sell off has pulled us down and through the $650 /oz.

I expect a sharp decline back to $580-590 /oz. Then the major up leg will begin. I strongly believe this because we have similar double peak formations in silver, the XAU, and HUI. We will pull back to the 200 day moving average where we have found infallible support. We will move positive from there.

A sign that this up leg wasn't THE up leg, was that the HUI was leading bullion prices. In other words, the HUI index was pulling bullion prices up instead of the bullion pulling the HUI.

Also, the breakouts that we saw in gold/USD wasn't seen in all other currencies. For example the C$ didn't experience the breakouts, or fake outs as I like to call them. All of this news is trivial to me. The move down should be swift, and the turn up should be swift. In the long run I am still very bullish on gold. A lot of people will exit their positions and buy back in once we hit the the 200 day MA. Not me. I would hate to miss the market after some geopolitical event that might cause a $50-$100 jump in the price /oz of gold. Also, although I'm pretty confident in my support lines and break down points, I haven't been in the game long enough to completely trust myself.

I still hold to my prediction of gold/silver hitting record highs in 2007.