Gold Prices: Are You Not Entertained?

To explain the price action seen in the Gold prices over the past month and a half, we had to borrow this article’s title from Russell Crowe’s performance in the film Gladiator. Because that’s pretty much what we’ve seen in Gold prices as this December rate hike from the Federal Reserve continues to get priced into markets: It’s been pure and utter carnage.

Since that pivot in the middle of October in which a December rate hike from the Fed went from a minimal possibility to a likely probability, we’ve seen Gold run lower by over 11%, and we’ve seen 25 of the past 32 days trade off. Numerous support levels have been smashed during this descent, and this has made short-side entries rather complicated as even retracements have been sold heavily. In our last article, we identified an aggressive short-setup off of a key level of resistance at $1,087.05. This is the 50% Fibonacci retracement of the ‘big picture’ move in Gold, taking the 1999 low at $253.30 up to the 2011 high at $1,920.80. And since then, we’ve seen Gold prices continue to react lower, and the first target has been met at the prior low of $1,063.84. The second target remains at $1,050, and given next week’s trove of upcoming data, this target could be soundly met in the early portion of next week.

But, on the prospect of new positions, we’re very much in the same situation that we were in when we discussed a similar movement in Gold prices in the article, The Carnage Continues in Gold Prices, and You Have 3 Choices. At the time of publishing that article, Gold had just broken below the previous 2015-low at $1,071.28. And as we advised in that article, it would probably be more accomodating to wait on the short-setup; let prices retrace so a more adequate entry could be taken with resistance offering risk management levels. A mere four days later, Gold prices had retraced to that $1,087.05 level and an aggressive short entry was possible.