By Neils Christensen of Kitco News
Monday November 14, 2016 11:23
(Kitco News) - The gold market is down more than 9% from last week’s election night highs and according to one award-winning technical analyst gold it at key crossroads.
December Comex gold futures last traded at $1,214.30 an ounce, down 0.83% on the day.
Clive LambertClive Lambert, technical analyst at Futurestechs, said in an interview with Kitco News that the yellow metal, from a technical point of view, is heavily oversold and could represent a buying opportunity. He added that he likes the idea of buying gold if the $1,212 level holds, but noting that this trade is only for “brave investors.”
He pointed out that $1,212 represents the 50% retracement level from the December 2015 to the July highs. This should be a significant support level, he said.
However, Lambert also said that in the current environment, it is difficult to predict gold’s move. He explained that the precious metal has, with fairly little effort, broken all major support levels since its October selloff and that if this trend continues, a break of the $1,200 level could eventually lead to a test of support at the $1,130 level.
“From a technical point of view, there isn’t much in the way if $1,200 breaks,” he said. “You have to be a brave investor if you want to be in the gold market right now. Right now gold looks like an interesting trade but it might be better to not stand in front of this freight train.”
Lambert added that any investors jumping into the gold market should maintain a tight stop around $1,201 an ounce.
Not only does gold’s technical picture appear bearish, but Lambert added that it has to contend with a rising equity market. While gold saw a massive upside rejection Tuesday, the Dow Jones industrial Average saw a massive downside rejection, which is a strong bullish signal. But he added that momentum indicators also show that equities are overbought.
“We are living in extraordinary times but it does feel like things are overstretched in a lot of markets. If you want to play these, you have to be fleet of foot, and not be surprised with anything that happens in these markets,” he said.