Gold due for a bounce

Gold had a promising start to 2014, but the yellow metal’s rally ran out of steam mid-March. Gold caught a bid again in June when President Obama announced a plan to send 300 military advisers to Iraq. However, that move also fizzled and the precious metal has moved steadily lower since then.

So far in September, SPDR Gold Shares (GLD), the exchange-traded fund I buy/sell for clients, is down 2.4% — surprising considering that this month is historically the best for bullion.

What’s weighing gold down? Blame the strength of the US Dollar. The Greenback and yellow metal have a strong track record of inverse correlation.

Currently gold is oversold and due for some sort of bounce. If that move is going to have legs, though, we need a “Golden Cross” where the metal’s 50-day averages crosses above (and stays above) its 200-day average. For now my intermediate-trend timing model for gold funds remains on its July 24 sell signal.

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦

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