During the last 20 months, the price of gold has been in a downward trend. In fact, since January 2013, the precious metal has only closed above its 52-week moving average for two weeks, and those were back-to-back weeks in March.
Since peaking just below the $1,400 level in March, the price has fallen more than 10 percent and many experts believe the price will continue to fall.
As the price has fallen, so has the bullish sentiment. The large speculator group was net long approximately 138,000 contracts as of the March 18 Commitment of Traders (COT) report.
According to the COT report from last Friday, that same group is net long 73,391 contracts. That is a drop in bullish sentiment of more than 40 percent. That is also the smallest net long position since February.
With the sentiment shifting and so many pundits predicting prices below $1,000 an ounce, I just don't think gold gets that low.
The chart shows solid support at the $1,180 level. This level represents lows from last June and December, so it should act as support should the price fall another $60 or so.
The downside seems limited to 5 percent or so, while there is much more potential to the upside. I wouldn't go long just yet, but if the price falls down to the $1,200 level, I would definitely look to play gold long.
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