by David Chapman, Gold Seek:
The precious metals sector is oversold and due for a bounce. Miners and metals have endured severe declines in recent weeks and are likely to rebound from the 2014 lows. The miners are just starting to rebound and the metals should follow. However, until proven otherwise this appears to be an oversold bounce that could last only a few weeks. Potential danger lies ahead before a sustained turnaround.
Below is Gold’s weekly line chart dating back to 2007. The metal has traded within in a slight descending channel for nearly two years. A break below such a channel would typically lead to an accelerated decline. If Gold makes a clear weekly close below $1150/oz then it could start to break lower in accelerated fashion towards $1080/oz, the 50% retracement of the entire bull market. Gold does not have strong support until the $1000 to $1040/oz range. Also, though Gold is extremely oversold in a long term sense, that is not the case from a near term view. A move below $1080/oz within the next seven weeks would bring Gold to an extreme near-term oversold condition.
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