Gold: Is the Bull Market Over?

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Gold suffered a steep drop on Tuesday with the widely-watched SPDR gold ETF GLD seeing its largest one-day decline in more than three years, writes MarketWatch.

With Wednesday’s close at $1266, gold’s year-to-date performance is now at 19.6% (it was up just shy of 30% two months ago), which is still much better than the S&P 500, up 5.7% this year.

gold spx performance ytd

Given Avi Gilburt’s comments on our show last week that gold is on the cusp of a multi-decade bull market with it facing a key test of that right now, it’s important we consider what he said in the context of Tuesday’s sell-off.

In the short-term, Avi told listeners on Thursday that he believed gold was in the process of a “corrective pullback” that would likely complete before the end of this year at lower prices. Given the move this week, his short-term outlook is certainly playing out on cue.

The key test he is watching for whether the “multi-decade bull market has really begun” is on the gold mining ETF GDX, specifically the 19.80 level (see below).

gdx fibonacci retracement

Gold mining stocks are widely watched for leading signals related to the broader metals complex and 19.8 on the GDX represents an important 61.8% Fibonacci retracement level off the August highs. If we stay above that level, Avi believes that will provide further confirmation that gold experienced a long-term bottom at the end of last year and is in the process of a major long-term advance. If we go below 19.8, Avi says he will revise his outlook.

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