The seasonal analysis on gold correctly identified the major summer low and the daily technical studies now indicate that the recent correction is likely over explains MoneyShow’s Tom Aspray.
It was another rough session for stocks Thursday and further overnight selling in Asia will again hit stocks early Friday. The closeness of the major averages to long term support and the oversold technical readings makes an oversold bounce likely by the middle of next week
Just a week ago the precious metals were hit hard as the December Comex gold contract lost over $36 per ounce and the Spyder Gold Trust (GLD) lost over 2%. This drop likely shook out the remaining weak long positions as both gold and silver have since rebounded nicely.
This rally has turned the daily technical studies slightly positive. As was the case last summer the technical and seasonal analysis both favor higher gold prices as we head into year-end. The seasonal chart from July shows that prices typically correct in October before again turning higher in November.
The next major seasonal high typically occurs in February. The December Comex gold contract peaked on February 29, 2012, at $1800.90 and then dropped to a low of $1535.40 in May. As I discussed in August, the monthly and weekly technical action indicates that gold will make new highs in 2013.
The leading gold and silver ETFs could see one more pullback in the next week, which is likely to be another buying opportunity, let’s look at the evidence.
Chart Analysis: The Spyder Gold Trust (GLD) has bounced 3.5% from the correction lows at $162.30. GLD found support between the 38.2% and 50% Fibonacci retracement levels as the daily uptrend, line a, was briefly broken.
NEXT PAGE: Let’s Look at Silver Next