Gold has pulled back very close to its 200 day Moving average which currently stands at around $330. Given the jump of 1.41 in the US dollar index this fall is not surprising. What is interesting to note is that both xau and hui finished the day in positive territory.
Technically gold is on very strong support right now. My feeling is that it may take some backing and filling for a while from here but as long as that 200 day MA holds it should be OK. These shakeouts move gold from weak to strong hands and it seems well set up now for the next moves upward.
Interesting note clipped below:Rick Ackerman Full Trading Notes for Wednesday Mar 12, 2003 Gold Chart 'Primed' We're not big fans of head-and-shoulders formations, mainly because they are far too popular with armchair technicians and dabblers. But we must admit to being impressed by the textbook clarity and quietly accreting power of a reverse (i.e., bullish) H&S pattern in the London Financial Times gold index. It has been building for nearly five years, with a left shoulder centered at a low made in the summer of 1998, a head created by an even lower low in November 2000, and a right shoulder formed around midyear of 2002. The chart was sent to us by a Florida subscriber, and although we cannot reproduce it herein, it depicts a commodity whose price is ready to explode. There is a kicker, too: The right shoulder describes an Elliott Wave correction pattern called a "five wave flat top triangle." Without going into detail, we will note that this pattern is nearing the end of a fifth-wave sell-off. The clear implication is that the price of gold is getting ready to explode. If so, those who have stuck by bullion and mining stocks through these last, difficult six weeks can take heart: Relief is near.
