Gold Spot price (GOLDS-1,387.92, see Figure 24) experienced the initial kickback rally following the completion of the 31% bear market decline. The rally failed to move into the 1,539 breakdown resistance level and was restrained under the falling 50-day MA. As covered in our extensive piece last month on Gold, price retreated again to test the recent 1,347 low and has essentially remained below 1,400, leaving open the question whether a double bottom, to be followed by a larger rally, is in place, or whether there may be further lows forthcoming.

Confirmation that a double bottom has come into place would not be realized until price were to lift convincingly through the level of the May 3rd kickback rally high of 1,470, to complete the double bottom formation with evidence of demand carrying to a higher high. The daily momentum has set in place a higher low (see arrow) offering a positive divergence to the price test, suggesting there could be a further probe above 1,400. But the weekly and monthly momentum (see herein last month) still remain hard down, suggesting ultimately there may be further risk. A breach of 1,347 retains our concern for the potential to stretch toward 1,200 at the 2005 uptrend line (depicted last month).

At best, sideways action might be anticipated between the low and 1,500 (even 1,550 at the 2012 downtrend). Given the degree of the damage to price, we know there may be an extended period of repair (backing and filling) even if the risk of new lows were no longer to be in place, which is not clear in this case.