Gold has now fallen eight days in a row. Something that’s happened only seven times since 1973. Are gold prices today a signal to get out… or buy more gold?
Over the last 8 trading days, gold has dropped from a recent high of $1257 to $1202.
Is it time to panic? Could this actually be a good thing? Let’s see.
Historically, when gold has dropped for 8 days straight, the following 2-3 months showed average gains of around +4%!
5 of the 7 times this has happened, the price of gold has rallied. That’s 71% of the time!
If Gold continues its decline today – and half-way through the trading day today gold is down slightly – that would signal an even rarer event.
Gold has seen its price drop for 9 days straight on only 4 occasions … and when that’s happened, the following 8 months have seen average gains of around +30%!
3 of the 4 times gold has dropped over 9 straight days, the price has rallied. Here are those trades:
Right now we’re seeing strong indicators that buttress our bullish prediction for gold.
The volume-at-price chart shows strong support at this $1200 level.
I’ve mentioned a couple of times before that one of the big things I’m waiting to see before I get super bullish on gold, is for the commercial hedgers and bigger institutions to show their bullish cards. I keep an eye on that by watching the Open Interest in the gold futures markets.
You can see in the chart below that when Open Interest in gold futures starts to climb from a very low level, gold prices start to climb too.
Right now it looks like we have a bottom in open interest, but it’s not yet clear that we’ve got a sustainable climb.
Finally, my proprietary time-cycle forecasts are also very bullish into the first week of April … and generally bullish into the spring.
By the way, last November, I told you what happened after the S&P 500 fell 8 days in a row. Since that time, as I predicted, the price of the S&P 500 has increased 13.41%.
Keep in mind that gold is still trading in the SSI Red zone. I’m a cautious bull on gold right now … and far from being alarmed at 8 or 9 consecutive days of declines, I’m excited.
Have a great weekend,
Richard Smith, PhD
CEO & Founder, TradeStops