My view is that sentiment is the primary driver of markets, especially in metals. The recent pullback in gold is at a very important juncture, and I am looking to buy back into the market, notes Avi Gilburt, founder of ElliottWaveTrader.
Over the last 40 years, we have seen many independent market studies published in support of the premise that the psychological side to the market is being recognized more and more as a true driver of markets. In fact, many articles have been disproving the common view that markets are driven by fundamentals.
Gold Futures
That said, let’s move on to my view on gold right now. If you followed my last article on gold back in mid-June, I suggested buying mining stocks as they looked to me as though they were bottoming.
Since that time, many went on very strong runs and gained over 50% from those lows. And, as we were topping in August, I told the members of Elliottwavetrader that I am cashing in half my positions for profit, as I had expected a pullback, and that is what we are seeing right now.
In gold futures (the December contract), I have support between 4,133-4,233. As long as that support holds, I am expecting another rally back up towards to at least the 5,100 region next.
If that support fails and we see a sustained break of that support, then it opens the door for lower lows in gold below the lows struck this past summer. But that would be an amazing buying opportunity for, thereafter, I would expect that rally to 5,100+.
