Gold has arrived at the outskirts of the massive $1820-$1790 buy zone. In addition to gold bullion, silver bullion and mining stocks can be bought there as well.
Gold has been holding up relatively well in the face of rising bond yields and dollar strength, but that may not last if Chinese investors slow purchases of the metal.
In a weekly chart of closes, gold is down $100 an ounce in very fast order. Very important though, is when a market is under this 18-week moving average of closes, you should have a downside bias.
In gold, we are on day four of a five-to-seven-day bloodbath phase. This produces a huge multi-week rally that I am convinced will give us the break out above 2090.
Because gold-mining earnings amplify gold price trends, gold stocks are effectively leveraged plays on gold. So their price levels relative to gold’s are a great valuation proxy.
Although the gold's correction has been mild, because it's gone on for so long, sentiment has become bearish. When gold is done consolidating, it will break out above all-time highs.
When the market is under the 18-day average of closes, I have a natural bearish bias. There is little to hold up the gold market right now. The dollar is strong.
