Friday, February 16, 2007

Gold Market Commentary

Dear readers,

In order to understand the current price behavior of gold you have to go back to the early 1980. Back then gold topped at 850$ an ounce, this is also the all time nominal top as most of you probably know. After going extremely parabolic and rising more then 100% in less then 2 month the price of gold immediately crashed back to 500$ in less then two month. Few month later a secondary top was created with a base at 600$ and several peaks above 655. – This is long term support & resistance.

Gold Fix Price 1980

gold fix price 1980 chart

Back to the present; consider the significant pullback in the price of: Crude Oil, Copper among other base metals and broad commodity indices. Gold stocks indices and also Silver did not confirm the recent highs. All this factors and more…support a pullback sooner rather then later. Refer to previous posts for short term Fibonacci support levels which seems to be abundant between 648$ and 600$. From an Elliott Wave perspective a pullback to not lower then 600$ is normal and my wave count stays unchanged.

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