Gold futuresÃ‚Â are falling, falling, falling, but it’s possible that the bottom is close. Last Wednesday, gold futures fell to their lowest level in the past 11 months, dropping to $762.50 an ounce on the Comex division of the New York Mercantile Exchange. Gold hasn’t seen closing levels this low since October 24, 2007.
Long-term, the drop doesn’t appear too significant, according to Gold Market Update. “Although the decline has taken the price some way below the 300-day moving average — the first time this happened since the bull market in gold began — and beneath the trendline shown on our chart, the price has not breached the first really important underlying support level, that arising from the big 2006-2007 trading range, and thus far it has barely touched the upper boundary of this strong support,” the site reads. Gold Market Update concludes that the future for gold still shimmers.
Despite ups and downs, investors remain bullishÃ‚Â whenÃ‚Â gold comes to mind. Recently, Mark Huber analyzed why some “gold bugs” have still been recommending gold bullion, despite a $200 price drop. He reports that the Hulbert Gold Newsletter Sentiment Index didn’t budge after gold’s fall, reflecting “abnormally high” levels: “To put [the HGNSI] level in perspective, it is higher than where it stood in early August, when bullion was trading above $900 per ounce … From a contrarian perspective, the bottom of gold’s decline will come when enough of the gold timers throw in the towel. Ironically, from that perspective, the gold bugs’ bullish persistence is extending the agony and postponing that eventual bottom.” We would suggest reading Huber’s article for more information on the topic, and keeping your eyes on the ball (or, perhaps, the bullion) in this volatile market.