Gold-Where to Now ?

In a recent blog-post I wrote of the “Pluto-effect” with respect to Gold futures. The “Pluto-effect” typically can be seen in mid to lare September each year when Pluto goes from being retrograde to being direct. There typically is an emotional response and Gold prices can exhibit an increase in volatility. Also in late September-early October Gold prices can be seen to respond to Sun forming its 90 degree square to Pluto.

This year, the “Pluto-effect” was again obvious on the charts. But, what is troubling is that Gold prices seem to lack staying power. That is, after an advance, price will slip backwards in a state of malaise. With all the troubles in the world and with the debt ceiling debate raging in Washington, one would instinctively think that Gold would be displaying firmer price action than it is….

If one considers that Gold made a significant low in 2001 and a significant high in 2011, one can contemplate the Fibonacci retracements of this multi-year advance. The 38% retracement places us at the $1284 level which is where Gold is positioned right now. If this level cannot hold, the 48.6% retracement will be at the $1100 level – not a good level given that the all-in cost of production for many Gold miners is right around this level.

So, Gold is at a critical juncture right now as it struggles to maintain the 38.2% retracement level. Will this level hold? Time will tell…..stay tuned….



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