Gold might correct on the downside, the technicals certainly point to that, but absent any major changes i'm not sure how it would fall below 1,500. The Fed has indicated it will keep rates low for at least another two years or as long as is needed. As long as that's happening to the reserve currency, what's the real downside risk to gold??
- A collapse of the Euro currency?
- A pre-emptive unilateral strike on Iran by Israel and the USA?
- Another round of QE, or QE like policies to "save" the Eurozone?
Doesn't seem likely does it, as these are all upside.
The real downside is a big surge in the US recovery which forces rates up and up quickly. You won't know what risk that has of happening for some time, as employment is still weak and we don't know if sentiment and manufacturing numbers are truly indicative of a signal of a decent recovery that might come or simply seasonal due to de-stocking and other positive seasonal factors.
The other events above would also de-stabilise the US and potentially force more QE, as would another war.
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