Gold Market Update by Clive Maund

Although the longer-term bullish case for gold could scarcely be stronger, over the short to medium-term the picture continues weak, with it looking vulnerable to breaking down into another downleg to the $1000 area and perhaps lower. In the last update you may recall that there was some optimism expressed that it might perk up on the dollar topping out, but such has not proved to be the case – instead it has performed miserably and now looks set to drop more steeply to new lows.

On its 8-year chart we can see that gold remains in the grip of the bearmarket in force from its bullmarket highs of 2011. The breakdown from the top area during the earlier part of 2013 lead to a severe decline, which has been followed by a downsloping trading range that has been going on for 2 years now. Its recent poor performance suggests that it is going to break down from this range and gravitate towards the strong support in the $1000 area and perhaps lower towards the lower boundary of the major downtrend channel, which move should end the bearmarket.
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