What I suspected was going to happen to gold after this week’s Fed meeting has happened as I wrote in a post a few days ago.
In August gold fell down to $1,170 and then bounced for several weeks back above $1,200 an ounce.
That bounce now is over as gold broke through $1,200 yesterday.
But this is nothing new. Gold has been breaking supports and bouncing and breaking supports over and over again since June as this gold price chart shows.
Gold is simply still locked in a downtrend that began in June when gold fell through $1,300 an ounce. The key gold stock indices held up in July, but then broke two year long support levels in August.
On Wednesday big cap giant NEM took a big dump, showing that the action in the big cap miners is negative, although there have been recent bright spots in ABX, RGLD, and several junior mining stocks.
NEM is now hanging on to support at the $29.00 level. It just looks like it is going to hold here for a bit and fall again.
People are asking me where this decline for gold will end.
A lot of people make price bottom predictions, but I really do not believe there is a way for ANYONE to predict at the exact price that anything will bottom at when it is in a decline like this.
In big bullish uptrends support levels such as the 150 and 200-day moving averages do act as reliable bottom buying points, but in big downtrends when something trades below these moving averages there is no real reliable support point anyone can point too. It is all just guessing.
Instead, the key thing to do is look for evidence that the downtrend is over.
And with gold and mining stocks I have seen none yet.
Now my expectation is that we’ll see gold trade sideways to down probably till the December FOMC meeting.
In the past several years we have seen several key bottoms put in for gold in December.
There is a money flow reason this happens with something trading weak in the second half of the year as tax loss sellers swamp a sector in the last few weeks of a year. As they finish their selling going into New Years the buyers are able to take over again in January.
So unless something really changes this is what I expect will happen.
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