- New Science in old markets -

Gold extends, but wait a bit

Gold prices have been falling for two weeks and the drop has just accelerated to produce an extension. The chart shows the story over the last few months. There was a lengthy run-up in price that ended in July and August with two attempts at the $1400 level, both of which failed and both produced top extensions. The subsequent two-month trading range then produced a compression that marked the start of a decline into a lower range. That compression was re-visited in the normal way as part of the new lower range and weakness then resumed to end with yesterday's bottom extension.

gold-bottom-ext

This new signal is quite short-term in nature. We don't usually distinguish between signals except to state whether they are daily-scale, weekly-scale and so on but there are other differences that we watch. This signal comes from quite a short price history and so is less likely to produce a good bounce, let alone a major low point. it is possible that the price will rally by $30 or so but it may be that this signal will only mark a pause in an ongoing decline. We will watch for more clues but we will not buy gold yet.