Gold’s gotten a new lease on life with Syria in the news. To some, the yellow metal is the ultimate safe haven. But, frankly, it seems like a stretch to think the war drums would be a lasting driver for the price of gold.
In fact, what’s happened in recent weeks has been perhaps the opposite of what was expected. Gold futures have fallen more than 7% in the past 11 trading days, and the price for immediate delivery stands at about $1,331 an ounce. And, during much of that time, it’s moved alongside the U.S. dollar, which also is counter-intuitive.
All things considered, the best way to approach gold today is from a technical perspective. Let price action do the talking.
I anticipated the pullback in price, and now I see three potential scenarios that will dictate my next gold trade. Here they are, in no particular order:
Scenario 1: Gold posts a bigger correction straight to $1,272.
Scenario 2: Gold bounces before falling deeper to $1,272.
Scenario 3: Gold recovers at current levels and re-enters its recent uptrend.
I see the possibility for any of those scenarios to play out in the near term.
But I think scenario two is most likely to occur, because I believe it will confound the greatest number of traders. (And that’s the market’s sole purpose in life, right?)
Aggressive short-term traders may consider buying gold now. But considering the scope of my trading service — Master Trader — I prefer to wait for a bounce to happen and then play for the start of a new push lower to $1,272.