Gold failed at $1,220 on Tuesday, falling $13 from that level to close at $1,207. The sell-off was no surprise, with gold reaching one of our resistance levels. The key here is today’s action and if the $1,190 level can hold.
As we commented, the best action for the metal would be some extended consolidation to form a strong bottom. That appears to be the case as gold looks to be making another higher low. The longer this consolidation pattern runs, the better the chances are that the lows are in.
The key levels are $1,220 on the upside and $1,195-$1,200 on the downside. Based on the pattern the last 10 days, it appears the bottoms are in and a run to $1,240 is next on the agenda. Of course, gold has to break above the $1,220 level to get there but the pattern is looking better, and probabilities are high that gold sees the next level.
By Todd ‘Bubba’ Horwitz
Contributing to kitco.com