Following the May 1, 2013 Market Minute titled "Has gold's bounce reached the peak?", the yellow metal has stalled at the $1487-$1485 resistance level for almost two weeks. Today's trading suggests the main downward trend is still in force and that another rollover maybe starting.

Gold's trading direction changed in October 2012 after the metal reached $1798.10. Since then, gold has steadily drifted lower with a series of declining price lows.

In early April, a dramatic drop occurred with gold breaking the key support level of $1550. Now the rebounding bounce, which developed in late April, is losing momentum.

Cycle models are implying a high probability of another low developing in late May to early June. As the trend, since October, has been down, the probability of the next low at or below the $1321.50 is great.

Bottom line: Gold's trading direction has changed. The metal is no longer going up. As gold trades on an average 6-week cycle, the next low should arrive in late May to early June.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2013 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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