Yesterday we warned at this point that gold investors should keep a cool head and should not be infected by the euphoria that is spread in some places. The gold price came under the wheel yesterday. While the precious metal was still trading above $ 1,600 in Asian trading, a slide in the $ 1,550 range followed in North American trading. Even today we see red signs in the gold price. Gold is now back to the pre-Iran-US escalation level.
The clearly overbought situation coupled with the fact that it was only a gold rally that was not accompanied by silver or by the mining stocks were clear warning signs for the gold bulls. The whole thing then unloaded itself yesterday in a clear sell-off, which hit silver and the mining stocks in addition to gold. Not surprisingly, gold is in a consolidation after the significant increase. This consolidation should occupy the gold price and the mining stocks in the coming days and weeks. However, gold should start relatively quickly after the clear sell-off for an initial recovery.
Bearish this entire development is not to be rated. On the contrary: after such an increase, consolidation is healthy. The ideal correction target is in the $ 1,500 range. That would be another three percent that gold could lose without the overall picture becoming significantly cloudy. From today’s perspective, the current consolidation should only be the foundation for the next upward movement, which should then drive gold above the highs reached in yesterday’s Asian trading. In addition, silver should show strength in the coming movement and leave the $ 20 mark behind.