Gold prices are at an important crossroad. If the bulls can beat the $1325.00-$1350.00 zone above, we could start to gain interest. In the same respect, any deterioration below $1275.00 on gold would show that the sellers are still too dominant for a short term bottom. If the bulls are successful, it may be the first technically positive price action this year as it will be supporting evidence that the $1200.00 bottom was a significant intermediate and potentially long-term bottom. If validated, even just a 50% retracement of the last gold bear market drop would see gold trade back to the $1500.00 level.
The short term momentum is being driven by a good short squeeze as bulls drive the market higher, but we are already overbought on short term indicators. We will on a short term basis be trading higher, but if we start to see failed rally attempts to the upside, it will be an important clue that big money traders are distributing into the strength.
The gold mining sector has experienced more negativity and pessimism than any other sector of the market. This has left investors feeling like deer in headlights. Gold bugs will suggest numerous reasons why the precious metal should be at $2,500 and why gold mining companies should be flourishing.
Topics: gold mining, gold mining stocks, GDX, gold mining sector, buying gold, buying gold miners, hedge against inflation, Gold Miner Bullish Percentage Index, strangle, call, put, option, indentifiable risk