Gold stretches the slump even further in ugly fall

Technical Analysis

Support breaks as gold tumbles

Gold is ending September at the lows of the month.

It has extended today’s brutal slump to $32.30 in a fall to $1464. It hit a 7-year high of $1557 at the start of the month but a turnaround in US-China trade talks kicked off a wave of selling and it despite a bounce around the Fed decision, it never fully recovered.

I highlighted the head-and-shoulders top earlier today with a couple potential interpretations. No matter how you draw it, however, it’s broken now and the measured target is $1400.

The lone caveat is that today is quarter-end and that can send some counter-trend signals. Gold is still up 4% quarter-to-date and there might be rebalancing demands or cash demands; plus there is a holiday in China.

What I think could happen is that this slump extends quickly, sparking a sharp squeeze. If so, I believe anything close to $1400 is a place to buy.


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