Tuesday, November 26, 2013

GOLD Weekly Chart Long-Term Decade Rally Fibonacci Retracements

Every day results in a new story about how gold is hated. As often happens at times of extreme sentiment, the opposite usually occurs. The decade-long gold rally was remarkable, from 250 bucks to 1900, +660%.  Back at the turn of the century, as savvy investors started to accumulate gold, they were called fools and idiots. Nearly 700% later no one was saying that anymore. Price continues to oscillate around the 32% Fibonacci retracement at 1265-ish, call it the 1250-1265 area. Price is 1251. A continued weakening in gold will create a move to the 50% Fib at 1072. The 62% Fib retracement is 878.

The move off the top is 650 points, from 1900 to 1250, -34%. Gold has lost one-third of its value in the last couple years. The current projection is that gold should hold the 1180-1250 area and recover. The new year, however, brings lots of questions. The majority of traders expect inflation to develop moving forward, and the 10-year yield to hit 3% and higher, which may favor the gold price, but Keystone continues to think disinflation and deflation moving forward and the 10-year yield likely to move lower for months ahead. As long as wages are flat and lower, inflation will not exist, and in a structural unemployment malaise, there will be no reason to raise wages in the coming months, perhaps years. Gold may seek the 50% Fib in early 2014 if the deflationary vibe grows but in the shorter term, days and weeks, gold should recover and hold the 32% Fib as support. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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