Gold (Charts)

June 26, 2013

The $88/oz. drop in gold on Thursday surely got the attention of a few – instilling fear in those who are still long the metal and greed in those who are not. While I doubt a final low will be seen in gold until the end of the year (the subject of another commentary) the time for a short bounce appears to be upon us.

The red line in Figure 1 measures the distance between the continuous gold futures contract and its 200-dma. Gold‘s distance from its 200-dma has been stretched to an extreme not seen since the low in 2008.

Gold Futures vs 200-dma

Looking at the CBOE Gold Volatility index (GVZ) we can see it has moved above its upper Bollinger Band. A move back below 27 would be a buy signal in this indicator.

Gold Futures vs 200-dma

Unfortunately, the expected rally looks to “taper” off no later than mid-July.


Comments are closed.