Gold was hit hard thursday with the precious metal ending the day down $25 to $1,258 an ounce. We have recovered to $1,270 but we are at a very critical juncture for Gold as the chart shows below
Gold has had a powerful start to 2015. Nevertheless the sector dropped more than enough recently to confirm a daily cycle low. Daily cycle lows are healthy and required in a bull market because they reset sentiment and allow momentum to build for another sustained move higher. However if Gold drops below the 200 moving day average of $1255, the 2015 gains may be lost quite quickly and the 2014 bear might return so we will continue to watch this asset class closely in the next few days.
If Gold does turn down, you are going to hear the same Gold bears calling for $900 Gold. One such sound-bite they are using at the moment is that lower oil prices is bearish for Gold. Their reasoning is that lower energy prices will lead to more mining as energy is a huge overhead in mine operation. These analysts are stating that this will lead to over supply which will drop the price even more. Don’t fall for this jargon. Demand will definitely outweigh the supply of Gold going forward. Don’t cough up your shares to the smart money if we suffer a sharp swift downturn from here. Have the courage to stay long