Gold Reaches A Peak

Following the August 31, 2013 Market Minute titled "gold's rise may be coming to an end", the precious metal now appears to have found solid upside resistance at $1,400-$1,450.

After 11 years of trading above the 45-month moving average (ma), this technical line is now acting as a well-defined resistance level.

 Gold advanced up to the 45-ma in August, stalled and then sold-off.

Though some short-term upside strength is possible for gold in October, the overwhelming evidence suggest that the counter-trend bounce for gold is almost over.

The main downward trend for gold is expected to commence by November. The 1st target is $1,250 followed by $1,150.

Bottom line:

Gold's counter-trend bounce appears to be over. Resistance was found at $1,400-$1,450. There may be some remaining mild upward strength for the precious metal in October, however, the main trend has turned down. Investors should expect lower levels by year-end.

Investment approach: For traders who wish to capitalize on the expected decline in gold prices, they may look at DB Gold Short ETN (DGZ). This security moves in the opposite direction to spot gold prices.
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