Gold continues to slide, and prices are below $1260 (currently $1258). Prices are fully oversold and extending beyond typical cycle metrics. This could persist anywhere from a few days up to a couple of weeks. We had a similar persistent decline in late 2016 which ended when prices finally established a swing low. I’ll be looking for a swing low again to signal an end to this attack.
All of the cycles are stretching, and this is turning into an extended washout event. Prices continue to grind lower. Sentiment is decidedly bearish, and almost everyone is calling for lower gold prices. The next level of support arrives between $1250 – $1255. If it fails, then we could see prices test the $1238 low. The next swing low…whenever it comes, should signal an end to this thrashing and identify the beginning of an equally powerful rally.
2016 Washout – We had a similar grinding washout period in late 2016 (this one should be much less severe). I didn’t think a repeat of 2016 was feasible while we were on the cusp of a breakout above $1,370, but I guess I was wrong. The extreme selling and persistent grind lower cleanses bullish sentiment entirely and paves the way for a sharp advance.
