Gold had another shocker last night, down -3.34%. That’s the third big downer in a row. Gold is extremely oversold with a CCI well under -200. You can see from the chart that whenever the CCI gets down to those extreme levels the commodity has rebounded fairly quickly. It is now sitting on a long term oblique support line and close to the September lows, but below the 170-Day Moving Average. That has provided support for the Gold price since January, 2009. I’ll be surprised if we don’t get a bounce here – but it has to get back above that big blue oblique resistance line to resume a bullish profile.
This is usually a bullish time for gold because of the Western festive season and later coming into Chinese New Year. But it seems that deflationary expectations engendered by the European debt crisis are now overshadowing the usual seasonals favouring Gold. And that is also a negative for stocks.
