Violent Oversold Reaction Continues in Gold Market

August 20th, 2013
in gold, syndication

by Erik McCurdy, Prometheus Market Insight

In June, we observed that the cyclical downtrend in gold was declining at an unsustainable rate following the trading range breakdown in April. During the final week of June, our analysis indicated that prices had returned to a level at which the development of a potentially violent oversold reaction was likely. As expected, an intermediate-term cycle low (ITCL) formed during the second week of July and the strong advance during the last six weeks suggests that intermediate-term cycle translation is in question, indicating that a long-term low may be forming.

Follow up:

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As always, it is important to remember that a long-term bottom is a process, not an event. It is too soon to know if a cyclical bottom is forming, but a development that would greatly increase the likelihood of the bottoming scenario could occur as soon as tomorrow. Therefore, it will be imperative to monitor price behavior closely on Friday for this potentially bullish development.

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