Gold rallied today as expected and overcame the $1623 target discussed in yesterday’s update. The move up is now poised to reach $1651. This is the 62 percent retracement of the decline from $1698.0. A close above $1651 would strongly suggest the move down is over. Closing above $1685, the 89 percent retracement and highest the wave up from $1576.0 projects, would confirm the move down is over and clear the way for $1707 and higher.
The move down from $1698.0 is forming a bullish flag that will have broken higher upon a close over $1651. Nonetheless, the move up from $1576 is due for a pullback soon, so there is a reasonable chance for a test of support before $1651 is overcome and almost certainly before gold settles above $1685.
Any move down will most likely be corrective and is expected to hold $1616. Key near-term support is $1601, a close below which would call for $1582 and possibly $1567, the latter if which is in line with the flag’s lower trend line.
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