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the gold bears last stand? Get ready to meet bubba!

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Sorry about the headline but JUST couldn’t resist!

Just whoever it is trying to sit on gold looks to us as if they are about to find out the meaning of the word “pain”. At just after 15:10 on the ISM print somebody took out seemingly the entire bid stack down to $1215 – an event we have seen one too many times this past 12 months and as illustrated below.

Only this time it hasn’t worked… and we are rallying back towards the mid $1240’s at the time of writing.

Whoever it is that wants the price down, it seems that they now have a fight on their hands. We have opined at great length on just why we think the precious metal is going one way (see Gold tab to the right) and today’s reaction price rally just emboldens us further in our view.

One other individual who seems to agree is Tom Fitzpatrick from Citi Technicals. See his chart and commentary below.

Bullish weekly reversal posted at the lows last week

This was from the same level at the 2013 low which means we could be setting up for a double bottom pattern

Weekly momentum has crossed back up from low levels

Overall, we would expect to see a decent bounce and would be focused on the double bottom neckline at $1,433 (which is where a downward sloping trend line also converges). A weekly close above there would amount to a decent medium term bullish break that would open the way for an eventual test of $1,685

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