Have been talking about gold for quite sometime to some close friends about it having made a major top in 1850-1900 range... Chart attached below shows the reason why...
A lot of fundamental guys have been very positive on gold because of the noise in Europe, US, bankruptcy, interest rates, currency issues and what not (which i frankly don't understand and i believe not a whole lot of do either). They have consistently recommended me have some portion of my portfolio as gold - "TO DIVERSIFY".. with a target price of 2200 and 2500.
Now, what has happened is large number of people are stuck buying gold at higher levels, especially the funds which have allocated some portion of their portfolio to gold. Most of today's selling i believe might be them who have to sell out of it to minimize losses ahead of the year end since they don't see any near term upside in it.
Very very crucial level to keep an eye on is 1500-1550 where we have seen many previous tops (as shown in chart) on top of which gold remains in a very oversold range (RSI on the chart) which is not seen to often and hence we might see it range bound action or an oversold bounce. Quick traders might play a bounce, but if we see an extended bounce (which i really really doubt) up to 1660-1675 it should be considered as a strong exit zone of even a short sale.
Index views:
Dow views remains the same for now 11700-11800 range on the downside and 12250-12300 on the upside remains the range. We should definitely not rule out entering painful zone if we don't hold the lower range which if happens might take a lot of time to recover.
Happy investing!!
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