Since December, spot gold has seen a seriously good bounce, up US$325 per ounce or 31 per cent, putting it among this year’s top performers. However, since early July when record futures open interest was even bigger than when prices were at a historical high in 2011, the market has been capped by secular trend-line resistance. Consolidation in a right-angled triangle was seen as an excuse to trim positions, and this week’s break below the psychological US$1,300 and trend-line support produced a sudden slump – a classic reaction to stale positions. The 200-day moving average at US$1,258 beckons now that we are well below the 50-day one. In the longer term, expect a retreat to 50 per cent retracement support at US$1,210.
