Since late March, gold prices have struggled to rebound off of the last intermediate-term cycle low (ITCL), favoring a continuation of the bearish translation that has persisted since October. This week, gold plunged 5 percent. The weekly close well below the ITCL in March reconfirms the current bearish translation and forecasts additional intermediate-term weakness heading into the next ITCL in late June or July.
The long-term correction from September 2011 developed into a consolidation formation in early 2012 and prices were confined to a trading range between 1,550 and 1,795 prior to the breakdown this week. The weekly close well below congestion support at the 1,550 level reconfirms the long-term correction and forecasts additional losses.
Our Gold Currency Index (GCI), which tracks the intrinsic value of gold as an international currency, closed sharply lower as well, breaking well below its comparable support level in the 40 area.
It is important to note that the secular bull market from 2001 remains healthy and the character of the correction from 2011 continues to favor an eventual resumption of the uptrend.
However, the breakdown on the weekly chart forecasts additional weakness during the next two to three months heading into the next intermediate-term low.