by Jordan Roy-Byrne, TheDailyGold:
Gold and gold miners have rebounded but remain in a technically weak position. Both markets have failed to move beyond the highs made last Friday. The same happened to the gold stocks in early October. They exploded higher one day but failed to muster anything after that. At that time Gold continued its rally for a few weeks. This time Gold has struggled to sustain Friday’s gains. While we are coming to the end of the bear market and one should not be too bearish, the downside target of $1000/oz Gold remains well in play.
The chart below shows the weekly Gold close since 1980 and the net non-commercial (speculative) position as a percentage of open interest. From this chart we can deduce the two most important levels: $720/oz and $1000/oz. Give or take $5/oz, $720/oz was the secondary peak in 1980, the peak in 2006, small resistance in 2007 and major support in 2008. Gold’s bottom in 2008 wasn’t random. It bottomed at an important pivot point around $700/oz. Today, Gold is in a downtrend without any major support until the $1000/oz level. That level marked important support and resistance from 2008 to 2010 and is the next major support.
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