Sellers beware

Click chart to enlarge
Chart courtesy of http://stockcharts.com

Following September 5th false breakout we had a devastating sell off that is likely not done yet. Nevertheless, we are already in a very extending stance for Gold. While not trying to guess bottoms, we must watch carefully any future buy signal.

As Gold continues to show weakness the setup on the daily chart may point to a near bottom. I think downside risk stays around 570/572 level. Though RSI(12) is already under 30 we may see some consolidation followed by a test to the 542 level. If this is to happen and Gold bounce back up then I believe a rally will follow.

Silver has a similar story and though it has a more substantial downside risk, at this juncture it is likely to go along with Gold.

Click chart to enlarge
Chart courtesy of http://stockcharts.com