Today's whipsaw action in gold was most interesting. On one hand it was looking like maybe we had hit a short term bottom with gold up $17 plus at one point. One click later at mid morning and gold was back to even, then down $15. That was quite the drop, a $32 swing, and I have never really found out what was the exact reason but the US dollar did not seem to move any serious amount to effect this.
On the other hand the XAU index was up all day and the metals stocks showed some good strength. This is an important signal if we are to be in a short term bottoming process. As per the chart above for the GLD ETF, the signals are nearing bottom in the next few days. I like to use the 3 month Stockscores chart as it has been very reliable in most cases, especially when looking for overbought and oversold conditions.
With Christmas on the horizon and a slowing market, we'll be bound to have some more profit taking and weaker bids so I won't rule out a couple of more shots to the downside here. Remember that the metals stocks and the metal itself don't always move in tandem but movement in the stocks first after a pullback is a very positive event but it is just one day so don't go all in at first spike.
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