Despite today’s action, there is no question that gold has made a bottom. Gold recently tested the $1,192 level on the December futures contract. It then popped back above $1,200 again. But gold keeps testing those lows and bouncing higher, and there’s really no major news to make the gold market keep doing that.
So gold is forming a major bottom.
But the interesting thing is how gold keeps trading with the action in the Chinese Shanghai Composite Index. If you look at the action in the Shanghai Index and the action in gold, they are very similar in terms of building a bottom. The Shanghai Index made its low in November of last year. Now the Chinese stock market is trading well even though the economy is growing less than expected.
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