Market Overview Analysis by Przemyslaw Radomski, CFA covering: XAU/USD, Gold Futures, US Dollar Index. Read Przemyslaw Radomski, CFA's latest article on Investing.com
And that’s exactly what we see in gold. Today, we see the “forth” part as the yellow metal erases its recent gains. Just as the daily upswings didn’t really matter, today’s decline is of little meaning, as this is just a blip on the radar screen compared to what’s to come – at least based on the analogy to what we saw in 2011 after a similar double-top pattern.
Gold price is now the midpoint between the local bottom and the final top, so we might see a quick rebound from here, and the back-and-forth movement based on bigger daily moves.And that plunge would be likely to materialize anyway. Once gold does indeed plunge, it would likely stop in $2,150 - $2,200 area – between the previous lows and highs. Back in 2011, gold price managed to briefly slide below the local tops before bouncing.
Of course, gold has no internal “will” to move lower – the above is a thought short-cut, which describes the current sentiment among gold investors/traders with lots of capital. This quick rebound is also in perfect tune with what we saw in the second half of March, shortly after the USD Index bottomed at the same support line. The history is rhyming, and the next verse is about a sizable rally in the USDX.
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