If you've been following along with Gold's decline of late, today was a fresh swipe from the bears mighty claw.
Last week's bounce off the critical 1,550 level was apparently not enough to hold the line.
Gold's nearly $100 plunge today finally found buyers at 1,476 and bounced enough to close above 1,501.
Big round numbers like 1,500 offer at least temporary but significant support and resistance.
For now the Gold Bulls have a chance here to rally up again and defend the uptrend they've enjoyed for the last decade.
If 1,500 doesn't hold, then the next major support isn't until the December 2010 highs at 1,450.
Below you can see a monthly chart going back to the very beginning of this bull market in Gold.
The 50 period exponential moving average has proven to be significant support in the past, most notably when Gold bounced on the plunge in 2008.
If Gold gets down to that level, I'd expect a similar response from buyers around the 1,445 level.
This sell off in Gold comes days after Goldman Sachs pronounced the decade long bull market dead.
This sell off also smacks of panic and desperation, which is typical of bottoms.
Note that the decline over the last many months has been on declining volume, so there may yet be hope for the bulls to turn this around.
We'll see what next week holds for the bulls in how they defend 1,500 from this wave of bears.
Of course, the stock market bulls had a banner week with the S&P rising above the 2007 all time highs.
Good Investing!
David K. Miller
Managing Editor, AbsoluteWealth.com
