From tonight's Elliot Wave forecast -
[April Gold] still holds the same near-term potential that we discussed Friday night. Upside momentum
is firming suggesting that a stronger rally than was seen today may be fast approaching. The near-term
pattern would look best with one more poke down beneath Friday's $260.70 low. From there, prices
could enjoy a steep advance for a week or more. On an intermediate-term basis, the "or more" part of
the preceding sentence is becoming intriguing. This weekend's Barrons published an article on gold
that is classically seen at solid bottoms. It was a dirge to the yellow metal, now considered a long lost
relic of the past. The article starts out with the phrase, "It's difficult to find any positive news in the
depressed gold market." It goes on to quote the director of marketing for the worlds sixth-largest
producer who says, "There doesn't seem to be anything on the horizon that will make gold prices go
up." The piece is chock full of bearish sentiment, the kind often associated with significant lows. You
might want to pick up a copy of the paper to read the article yourself. Whenever we read comments
and articles such as this on a particular market, our antenna go up because they usually mean that a
turn is imminent. So a rally in gold now could turn into something much larger to shake all the shorts out
of the market. In the February EWFF we had listed resistance of $284-294 basis spot, but if a move up
gets some legs, this area could prove conservative. Mind you, nothing in the wave pattern at the
moment indicates that this large of rally is underway now, but surveying the sentiment scene this past
weekend towards this metal certainly has caught our attention. Near term, if one more down leg is
seen, lower support remains $258.50-$260.00. Wavers, while we don't think a large rally is starting
right now, if gold pushes above $268.50, we will turn bullish and place our initial stop at $263.50. |
