Gold topping out?
Is the rally over for gold?
On 15 October, the precious metal slumped through $1750 level for the first time since early September. This downside breakout followed shortly after a failed upside breakout at $1,800 (see below).
Technically, gold's daily chart certainly looks bearish and short-term toppy.
However, I am uncertain how far the downtrend will persist, simply because there is support at the 50-day moving average, followed by another at $1670, where the 150-day moving average is currently situated. If that goes, there is another support at $1600.
Therefore I would not short the metal from here, preferring to buy it on further setbacks after the weak hands are forced out. The entry range for gold is at $1700-$1670; for silver $31.00-$30.00.
As a matter of fact, the UK Stock Service has been making bullish calls on gold, silver, and precious metal miners since late July.
For example, I recommended a buy in Fresnillo, one of the largest silver miners in the world listed in the U.K., several times before prices rallied 25% (see right). The firm recorded a 15.1% rise in gold production this month.
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Dr Jackson Wong, London