So i took a look at the big picture.
If you look at the gold price using GLD etf chart, it's pretty much a waterfall drop since Trump election on 9 Nov.
|3 month GLD chart as of 2 Dec 2016|
But if we look at the gold miners using GDX etf, it has been going sideways since 14 Nov. My 2 fave technical indicators are also showing positive divergences.
|3 month GDX chart as of 2 Dec 2016|
Since GDX has been going sideways for more than 2 weeks while GDX is still taking a dive, how do i know if GLD is ready to bounce? We don't know. But here are a few clues.
1. GLD gapped up on 2 Nov.
2. MACD in GLD is curling up.
If GDX has a bounce from here, 22.8 seems like a logical target/resistance (see chart above).
These are gold's technical. Let's look at the fundamental driving forces behind it.
In the short term, both the rise of USD and 10 Year Treasury Note Yield (TNX) has been very extended, and some retracements is undergoing. This favors the rise of gold price.
The DXY is rolling over with a rounding top (or mini H&S formation depending how you look at it). Technical indicators are also rolling over. It looks like it wants to move to the 99.0 important support level. Maybe. Time will tell.
|6 month chart of DXY (US Dollar Index)|
The 10 Year Treasury Note Yield (TNX) has just touched its 30 year (from 1986 to 2016) downtrend resistance. There're 2 probable scenarios.
1. The rise in yield (TNX) during the Trump Jump is just a bear rally and the call of the burst of bond bubble had been premature. This is extremely bullish for gold in both the short term and longer term.
2. This is just a small retracement in the rise in TNX (or the fall in bond prices TLT) because it's overbought in the short term. This is bullish for gold in the short term only. In other word, a tradable bounce (much like the bounce we had from early October to November just before the Trump Jump).
|10 Year T Note price chart (TNX) from 1986 to 2016|
The Italian Referendum may have some effect on gold price too. Its outcome is too difficult to predict and thus its effect on the price of gold.
Next week would be crucial in development of a gold bounce in both GLD and GDX. Keep your eyes peeled.