Gold here is at crossroads. One idea is that it is normal summer time market correction, quite a bit overdone, but gold will recover from here supported by value buying, physical buying etc. Other opinion is that it has really broken down and next come projections of $550-$600 on wild side to more rational $680-$730. If you do not get confused, you are blessed !
After filtering out the noise from both sides, and taking into consideration the hard facts, I have come to following conclusion :
It is true that the summer downturn is harsher, deeper than expected. Everyone was expecting gold to hold above previous all time high of $850, given the credit crunch and financial market turmoil. But gold always surprises you, doesn't it ? Whether on upside or downside. But is this summer downturn a real downturn ? Beginning of a bear market ? It might look like one but doesn't feel like one. It might look like one technically on charts, but fundamentally you do know it couldn't be happening, right ? Yes, it should not be happening. But, but hard facts are hard facts. Gold is *below* its very important $850 level, and *below* its very very important 60 week moving average of $832 and 65 week moving average of $818. Gold has been above these moving averages for almost last eight years. So where does that leave us ?
If gold does not recover above these numbers $818, $832 and $850 soon enough; at the moment I have no idea what to think. And it might bounce from say $800 or $790 or $772 or even $730.
At least after taking this view you can watch the market with open mind to see which scenario is actually playing out.
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