Gold bound for a holiday, in the south?
Gold got our attention at the end of September, when we expected it to break out of a resistance and reach 800 cents early 2008 or even earlier, as seen here. The goal was hit quite early as the December contract reached 800 on October 31. reaching 800.8 cents during the day. There was quite a force lifting the gold to these heights and when that happens, a correction is always imminent, and the gold has shown some signs of reduced force
for the upside. But how big a correction can be expected.
When looking at the daily chart, a divergence could be seen between the Slow Stochastic indicator (SSTO) and the daily price movements from the 12 of September to November 1. When the SSTO is showing a set of lower highs and the prices are showing higher highs, the market is in for a reversal. This formation was evident when looking at the daily chart and thus indicated a reversal, or at least a pause in the rising prices. The price of the gold December 2007 contract did retrace from 848 cents on the November 7. until it got supported at 773,4 on November 20. and the prices began to rise again.
There is a small support area on the daily chart between about 729 and 776 cents, and
it held the first attempt to break through. But this is not a very strong support for the bulls and could be broken. The 651 to 718 tunnel is, on the other hand, quite a good support for the bulls on the daily chart and could mark the return of the gold prices to the upside.
The weekly chart shows a possible support at 692, which supports the daily chart. This support is also evident on the monthly chart as the 23.6% retracement level, according to the Fibonacci rule, is around 699.
The SSTO on the weekly chart hints at a further downside or correction. This could mean that the present reversal of the downward movement 
could be temporary and that the present support could give in. Should that happen, the prices are most likely to go near the 700 mark, before the prices start to rise again.
The indications are that the gold could retrace to around 700, even though there might be some attempts to break the high in the near future.
