What’s Next For Gold?

Since the November 2014 low, gold has gained more than 15% before the recent pullback to the 1236 level. The November low was 1130.40 and the recent high was made on 1/22/2015 at 1307.80. Looking at the recent daily price chart, it shows the price has pullback and found support near the 38.2% Fibonacci retracement level at 1221. Presently, it appears to be consolidating within the Fibonacci retracement zone between the 38.2% and 61.8%. If the price moves above the 61.8% (1255.60), then a retest of the recent high at 1307.80 (100% Fibonacci retracement) is a possibility along with the 1346 level which represents the 127.2% Fibonacci extension. The Fibonacci 127.2% is also in confluent with the 7/10/2014 intraday high of 1346.80.

(click the chart to enlarge)


The price action of gold reflected on the ETF, GLD as follow: 38.2% Fibonacci retracement at 117.39, 100% at 125.58, and 127.2% extension at 129.19, 7/10/2014 intraday high at 129.21.



The inverse 3X leveraged EFT for GLD, DUST is showing a sign of forming a bottoming base as gold is consolidating in the Fibonacci retracement zone. Since the current trend for gold is still remain to be up, any trade other than a trade holding for 1-2 day is not worth the risk as gold can suddenly initiate a new move to the upside.



The gold miners ETF, GDX is showing a pennant being formed. The measured move price targets for this pennant are: 26.16 at 80% and 27.37 at 100%.



The junior gold miners ETF, GDXJ is also showing consolidation within the Fibonacci retracement zone. If it breaks above the short term trendline tracking the recent pullback, then the 100% Fibonacci retracement at 30.74 could be retested with the 127.2% at 33.23 as a possible further upside target.



Gold along with the gold miners had a nice bounce off the November 2014 low. Since the long term down trend has been broken, the recent decline is being treated as a pullback. Until major support level has been broken, one should refrain from initiating short swing trades. Instead, one should keep watch for potential swing long setups as prices break away from the consolidation/retracement zone.