Gold To See Short-Term Bounce, But Down Trend Isn't Over - Market Strategist
(Kitco News)- While thegold market could see a bounce from its recent 1.5 year low, one marketstrategist said that more work needs to be done before the precious metalresumes its long-term uptrend.
AviGilburt, creator of ElliottWaveTrader.netsaid that he is expecting to see a small reprieve in gold’s selling pressure inthe near-term and expects SPDR Gold Shares (NYSE: GLD) to push to resistancearound $115 and $116 a share. However, he added that he prefers to play gold tothe downside until there is a clear break in the four-month selloff.
“I was very bullish on gold coming into 2018 but I said that the marketneeded to hold $119. Once we broke that level I became very concerned,” hesaid. “I think we need to see a deeper correction around $105 before we bottom.Right now I am playing shorts off resistance levels, but I am also holding somelong-term longs.”
GLD last traded at 112.60 an ounce. Gilburt’s ultimate target sees theprice down another 6% before the market is ready to turn around. A fall to 105would mark the ETF’s lowest price since mid-January 2016.
Gilburt added that because of volatility in the marketplace, with noclear price trend, he is staying away from leveraged investments like optionsand exotic exchange-traded funds.
“Until there is clear bullish direction in the market, investors whowant to trade gold should stick with GLD,” he said.
Looking ahead, Gilburt said that with the current technical patternthat is forming, he expects $105 will hold as a long-term bottom. He added thathe is not concerned with the growing negative in the marketplace.
“Sentiment can get a lot more extreme but the more it stretches thebigger the snap back we can expect to see, like a rubber band,” he said.
As for other precious metals, Gilburt said that that he is currentlyjust focusing on gold as it has the clearest technical pattern form.
“I don’t see a bottom in sight for silver right now so prices can stillgo lower,” he said.
As for the mining sector, Gilburt said that he could see the VanEckVectors Gold Miners ETF (NYSE: GDX) falling to $15 a share before it finallybottoms.
“The market is in the process of forming a complex bottoming structureand I think we will see lower prices before it’s done,” he said.
GDX last traded at$18.48 an ounce and Gilburt’s target would represent a further nearly 19%decline in the price.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.