Gold Has Moved Off Of Wednesday’s $1213 Bottom, But Will The Rally Grow Legs?

Gold’s endless thrashing of mostly downward price action is discouraging, but the chart is still quite bullish, giving the gold bulls the edge. Here’s why…

by Rick Ackerman of Rick’s Picks

Gold has once again fallen into a rut, dropping moderately for three consecutive days. This has occurred with the December contract having failed by $8 to achieve a $1254.10 rally target I’d flagged. The futures have since made a tentative bottom 0.60 above the $1212.80 correction target where I’d suggested bottom-fishing.  Thus did we narrowly miss catching the $5.40 rally that ensued. But will it get legs? I doubt it. Even so, lest we become depressed, consider today’s chart (inset), which is quite bullish:

Rick’s Picks falls somewhere around the middle of the pack in letting gold’s seemingly endless thrashing around, mostly southbound, discourage us. But we can still read a chart, and the one shown gives bulls the edge because of last week’s upthrust to 1246.00. That slightly exceeded a July peak, creating a by-the-book impulse leg of intermediate degree.  To negate it, the December contract would have to fall beneath August’s 1167.10 low. That’s not out of the question, and we shouldn’t be surprised if the futures do just that in order to jerk bulls’ chains for the umpteenth time. Regardless, the uptrend begun in August deserves the benefit of the doubt, and any rally of $15 or more will kick it into mid-gear.

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