Putting Gold's Recent Price Decline Into Perspective

Considering the recent price declines in gold, one must not forget that the precious yellow metal has been one of the best performing assets in 2016.

Yes, gold prices have dropped from their recent intraday high at 1306, but more importantly they have risen dramatically from the intraday lows we saw at the end of last year and the beginning of this year when gold traded at 1045 per ounce.

That being said, one must factor in this most recent price decline as a defined normal correction of the dynamic rally that moved gold prices from 1045 to 1300 per ounce.

There was no rest over Memorial Day Weekend, as traders saw gold trade to a 3-½ month low on an intraday basis.

Although trading was closed on Monday, May 30 (Memorial Day), traders overseas moved gold prices below $1200 to trade to an intraday low of 1199.

That price dip would be short-lived as US markets opened on Tuesday and a rally ensued.

The net result was gold prices closed strongly higher settling at 1215 per ounce. More impressively, gold was able to close higher in light of a strengthening US dollar.

Based upon the Kitco gold index the ten-dollar rise in gold prices today were fully accountable within the confines of normal trading, which accounted for a $12 gain.

After subtracting approximately two dollars for US dollar strength, gold had a net gain today of approximately $10.

If you recall from Friday’s report, it was our belief that we could see gold trade as low as 1208, and at that point we would look to see if on a technical basis gold would find support at that price point.

Based upon our most recent studies we have seen the first components necessary to trigger a buy signal in gold.

Lastly it is important for us to be aware of market data scheduled to be released this week, which would include the ECB monetary policy meeting and an OPEC oil cartel meeting on Thursday, culminating with the US jobs report for May, which will be released on Friday.

Wishing you is always, good trading,