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The gold price has done nothing over the seven-month period since then, having recorded a low of $1185 in late December. This trading range is likely to continue.
Last December’s fall to $1185 marks the second occasion the price has tested the $1184-95 support band since the all-time high was established in 2011. Neither of the subsequent rallies has impressed me much, however, and there is a strong technical case to suggest this most recent rally will fail too.
Although the fall to $1197 completed a 33.33% correction from the secondary high in October 2012, it is the even stronger support in the $956-1035 band that interests me most. An extension of the broader correction to within this band would take gold back to its G1 and G2 levels, or, in other words, complete a 50% correction from its all-time high.
Gold needs to regain the territory above the $1530 level in order to abort the current downtrend. Until this occurs, the risk remains to the downside.
Recommendation: neutral. Buy aggressively on any fall to $1035.