Gold Bulls Let Down Again In Precious Metals Latest Slide

For the last 2 or 3 years, Gold bulls have gotten their hopes up, only to be let down time and time again. In short, it’s been a slow grind lower over the last several months. And this is likely wearing on the psychology of Gold bulls as much as it is on Gold prices.

But this isn’t atypical. And it doesn’t mean that Gold is dead for good. It is simply part of the cycle… and the current price action is still bearish until proven otherwise.

In this vein, it would be good to see Gold bulls capitulate in epic fashion (trust me, true capitulation always feels epic).  A deep decline below $1000 that gets investors to swear it off for good would likely set up Gold prices for the next major leg higher.

Yeah, I don’t think that Gold is dead and gone forever. I just think that it needs a true turnover and refresh. It often takes a good whoosh to reset the psychology.

As you can see in the chart below, Gold prices have been grinding lower in a declining price channel. It may take a sharp break lower out of this channel to provide proper capitulation (and opportunity for the patient).

Also note that the Relative Strength Index (RSI) has failed to break above 70 (on the weekly chart) since peaking. For me, a move above 70 would be an excellent signal that Gold is back.

Let’s zoom in a bit more and look at the recent price action on the daily chart for Gold. Note that a similar chart was shared last week on Twitter as Gold prices were retesting the breakout area and uptrend line. That’s past tense of a reason… Gold didn’t hold either support level and is also back below its 50 day moving average.

Lastly, it’s worth noting (more so for traders) that Gold is oversold on the daily chart (sub-30 RSI) . This could set up a rally back to the 50 day moving average (around 1140). Gold will need to overtake this key moving average if it has any hopes of mounting a lasting rally.

Thanks for reading.

Twitter: @andrewnyquist

No position in any of the mentioned securities.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.