It seems that the broad market correction is in full swing now and unfortunately this also looks like it means the gold market is going to take some bad hits as well.
Both the GDX gold stock mining index and the gold price as represented by the GLD ETF are taking hits today along with the stock market.
The most frustrating thing about the gold market in recent years has been its inability to shake off broad market weakness instead of being a solid safe haven, at least during certain short term periods. From the longer term perspective of 2001 it has done well relative strength wise to most other markets. But when it comes to panic selling in the broad market, it just seems everyone wants to dump their gold and gold stocks as well.
I mentioned in the post previous to this one that the US Dollar is getting a weekly bullish MACD cross that should keep a bid under the US Dollar for quite some time. That is going to be a problem not only for the stock market but the gold market as well.
In a previous post on gold I wrote about how the gold price needed to hold crucial support levels in the 990 range in order for the bullish case to stay intact. It did just that and then shot higher into the low 1000 range.
But I gotta tell you I am somewhat surprised how lame this gold price breakout has been. It has not been exciting to say the least. It has been quite, slow and labored. That is not what I would expect to see on a breakout of this magnitude and out of such a large pattern. It is true that gold has been conspicuously quiet in its bull market moves, but this move really surprised me.
Nevertheless, the gold price should still be considered to be bullish as long as it can hold above its neckline support above the 980 range. No matter how scary the decline is over the coming weeks, as long as gold can hold above 980 range, then I have to stay long term bullish on the metal.
However, if it for some reason fails to hold and breaks under that range then it does create a big problem in the short term, intermediate term and long term for gold so that in my opinion is definitely a level to keep a close eye on in the weeks and months ahead.