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Gold is in limbo at the moment when you study its cycles and its sentiment readings. We definitely are in the timing band for an intermediate cycle low which could have taken place on the eleventh of July. But there are still some variables that haven’t been answered yet which could mean that lower lows could still be on the cards. For example if you look at a technical chart, the weekly slow stochastics just didn’t drop to the levels we usually see at intermediate lows. Furthermore even though we did produce a failed cycle in this intermediate cycle (which basically means that the recent lows in July went below the last daily cycle low in May), sentiment just didn’t drop to what we would usually see at hard lows.
Moreover volume (Banks & big institutions) in the mining sector (NYSE:NUGT) didn’t spike to levels we usually see at major bottoms. This capital usually comes into sectors when smart money sees really low sentiment levels and huge risk/reward set ups. This volume was missing though in these recent lows of early July so the question then is whether we have a new daily cycle in play at present or we have indeed printed a mild intermediate cycle. We probably won’t know for a while though. What I would like to see is for gold to continue its rally at least up to the 1,270 level over the next week or so. Usually the first daily cycle of an intermediate cycle is the most powerful so we need to start seeing this sustained momentum soon. Remember if the lows are not in yet, this intermediate cycle has now gone well over 30 weeks which means the cycle is stretched as it is. Lower lows you would think would have to come quickly because intermediate cycles rarely last this long which would mean the following IC should be a bit shorter – maybe around the twenty week level.