Technically:
- One way to look at it would be to say that the 2011 TOP was the end of the rally since 2001 and a large correction to 900/700 may be required/expected.
- The other way to look at it:
* the correction from 2011 is just correcting the move from 2008 to 2011 and there is a 3rd rally missing.
* the fact that it corrected 61.8% of the previous move could be interesting.
My point is: both scnearios are possible really but in terms of risk reward without evaluating the probability to stop at say 1111 or whatever figure you bick, if it works, it could be for a large reward/risk.
In essence: if Gold is not in a larger correction to 900 or in multi-decade slide, 2400 could be the next target.
Fundamentally - What has been affecting gold:
- A strong psychological attachment to its value as safe haven (note only 1% of the production is used in the industry).
- Inflation.
- Rates: The lower the better unless super high inflation. Real Rates a better measure. (Gold does not provide any yield)
- USD strength because this is the currency in which it is measured but not produced.
- Currency risks (going back to inflation)
If you look at an inflation adjusted chart of gold itself, you will find out out that it is 50% lower compared to its previous top in 1980, 35 years ago. From that angle, a move up is not out of place.
Currently the fear is deflation but longer term, all these QE create Long Term Inflation fears.
Rates can't be lower and that is supportive locally.
The Greece/Italy Saga may not be over.. it would take a few months to intensify if it does.
