Gold Bounce To Higher Levels Possible

In my last missive, I looked at the long term trend for gold. It was bearish at the time, and nothing has changed in the price action since to change that long term bearish prognosis. However, I can change that previous final assessment from Extreme Caution to just Caution as far as the long term is concerned. So, the long term remains Bearish, and hopefully something will improve from this standpoint.

Intermediate Term
The market action which occured almost immediately after my previous post was sure a surprise. I was very cautious about the futurem but did not expect such a sharp plunge.

From an intermediate term standpoint, we have been in a bear market since late last year and remain so. The price of gold remains below its intermediate term moving average line, and the line slope remains in the negative direction. The price action is still some distance below serious resistance (at $1550), but there are some indications that the price might just tune back to the downside before getting much closer. The other resistance line is the previous channel lower support line, which is now a resistance. The action on Friday ended just below this resistance. It does look like gold wants to get back to its downward trend and the action over the next day or so should confirm this or not.

One intermediate term indicator I like and rarely ignore is the crossing of the intermediate term moving average line by the short term line. Since crossing below the intermediate term line in late October, the short term line has remained below since and is still some distance from the intermediate term line, suggesting much work yet needs to be done before we can go over to the bullish side.

Finally, one must check in on the volume action. Here we see very low volume on the upside and not the kind of volume action to make one feel exuberant.

For now the intermediate term can only be classified as Bearish.

Short term
The short term gold trend went bullish about two weeks ago, but has really not gone anywhere since. It is in a topping mode due to that channel resistance line. The short term strength also seems to be hitting a ceiling, and is just on its neutral line on the short term RSI. All in all, even though gold can still be rated as being on the Bullish side from the short term perspective, such a rating is in danger of being reversed.