by Trader Dan
Gold bulls have performed admirably since the last few trading days of 2011 having taken the gold price up over $100 since that time period. The rally has been very impressive, especially given the strength in the US Dollar and the move to a brand new 52 week low in the Euro. However, bulls are now at an inflection point technically and will need to drive it up through today’s session high just shy of $1650 if they are going to be able to force a larger number of shorts out and take this thing to the next layer of heavy chart resistance near the $1,680 level.
The market has been encountering selling coming from both profit taking after that $100+ run in addition to fresh short selling by our favorite group (the bullion banks – who else?) That selling is showing up in the market’s inability to extend and get a CLOSE above Monday’s high. The market has probed that level twice since then and is thus far unable to push higher. If the bulls can perform tomorrow, then this thing should run rapidly towards $1,675 – $1,680 where the bears will make another stand. If not, and the longs get impatient instead, then expect prices to set back towards $1620 first followed by a test of $1600 if that does not uncover dip buying.
A break below $1535, the double bottom region noted on the chart, that does not quickly recover, would signify deeper losses are ahead.