By Jeff Pierce
After last weeks plunge in gold prices I expect a little more upside near the $1639 level before this starts it’s final leg down to the $1400 level. And when you check out the monthly chart below a drop of $200 is nothing.. (nooothing) when you compare the move it has had for all of 2000. I personally would like to see it drop even further as the more fear that happens when this drop the better.
When the monthly RSI gets to 40 start to watch for signs of support on the chart…and buy into that fear. I warn you it will be difficult as everyone will be declaring the gold bull market over. My analysis suggests that anybody buying now will be underwater very soon, but a great long term buying opportunity in gold could be a few months away.
Trading bias – I would either be short or neutral looking to add to shorts in the coming days to weeks. I would not be long gold right now as there is too much risk to the downside.