Gold is now down ~$80/oz (~6.2%) since it peaked at $1297.40 on April 17th. However, the decline has felt much worse for those invested in the sector probably because gold mining shares have, for the most part, fallen 2x-4x as much as gold on a percentage basis during the same time frame. 

Where are we now?

Gold (Daily)

At last trade June gold is at $1217, down .8% on the session. The 50% retrace of the December 2016-April 2017 rally comes in at $1211 which also happens to be an important level of previous support going back to last summer. Between $1190 and $1220 there are literally layers of potential support.

A positive case can be made for gold due to the CCI reaching -200 last week, an indication of a market being oversold which has often closely coincided with important lows including last December. However, on the flip side of that we haven't seen what I would deem to be a "capitulation moment" - if anything the recent decline has been fairly orderly. Moreover, most of the sentiment data I look at is still arguably in neutral territory (gold mining shares have much worse sentiment than gold itself).

We're a lot closer to a tradable low but it's far from an easy short term trading call. Definitely not in the fat-pitch category. Gold has also turned into a bit of a trading ping pong ball being pushed around by movement in the US dollar-Japanese yen cross and the movements in Treasury yields; gold is trading at about a 90% negative correlation to the yield on the 10-year Treasury note currently. Therefore, we're probably in for more of a choppy range-bound trade as the 10-year yield moves up towards the upper end of its recent range (2.40%) and the USD/JPY also approaches major resistance near 114. 

One final positive comes in the form of a subtle bullish divergence in the gold miners which have not made a new low this week even while gold has; bottoms often begin to take shape with gold miners turning up first from an oversold condition.

Sorry nothing brilliant here, just calling it like I see it.


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