Gold: Yellow Metal Stays Firm Against A Strong Dollar

London (Dec 17)  I wrote an article on gold (NYSE:GLD) recently where I stated that risk remained firmly in this market and that a trip down to $1,200 an ounce was definitely a possibility. Well the GLD gold ETF for example used the FOMC meeting this week to at least temporarily print a bottom. We saw the same bottoming behavior on the 12th of this month across both silver (NYSE:SLV) and the miners (NYSE:GDX). What was interesting though was that the junior miners (NYSE:GDXJ) bottomed earlier than the rest of the complex - the week before in fact on the 7th. Furthermore the juniors used the FOMC meeting this week to enhance its gains. The juniors ETF is already up almost 4% since the 7th of this month and looks like it wants to increase those gains.

The million dollar question now is whether we have seen a hard bottom in the precious metals complex. The odds look favorable especially considering the length of the last daily cycle. On the gold chart for example, the last daily cycle bottom occurred in early October. This means that this cycle is already over 2 months in duration which means the bottom is more than likely in. Gold stopped to pretty oversold conditions at the start of this month and considering the length of the October cycle, the bottom looks to be more than likely in.

IndividualTrader