August Gold on the weekly chart has retraced 25% of its 9-month, $625 dollar sell off as of today’s bounce. Gold saw a 35% decline in value over this down move. I am not sure if this is anything more than a technical rally. Some are blaming this on Bernanke’s comments. I think its more like a lot of folks got short gold below 1300, had a $120 winner on the books, and are now heading for the exit before heading on vacation.
August is almost upon us. That’s when most of Europe goes on vacation and a lot of US money mangers slow down for some time off as well. This creates low volume choppy trade.
Because of this, for a speculative trade, I’d buy 1420 calls and even 1500 calls.
1417 would be a 38% retracement. I think that’s a very reasonable upside target from here.
1491 would be a 50% retracement and would be an area I’d want to establish short positions in Gold.
CER
