The gold spot is reaching the lower band of my target from $610 to $685 while HUI is very close to 300 now, a good support level. Assuming that precious metal markets are in a bull market, I believe that this is a good entry point for anyone who has no positions in this sector. The downside risk should be small, no more than 10%-15%, whether you buy into physical bullions or mining equities.
I may wait one more day and see how things unfold before I make some move. But in any case, I believe that the downside should be fairly limited at the current price.
By the way, I do want to add that there was a rumor of central bank heavy selling their gold in this summer (from http://www.billcara.com/ I believe). It looks like it’s probably true, since gold market is acting relatively weak since the last short-term peak. While that’s a negative factor, we will also have an Indian gold-buying season from November to December.
What we see for the fourth quarter of each is the impact of the gift-giving tradition associated with the druid Winter Solstice, now known as Christmas. Layered on top of that is the Indian festival season of Diwali, which kicks off in November and continues through the first leg of the traditional wedding season in December.
You can see noticeable spikes in both January and September, months when Indian manufacturers typically restock inventories to meet the demands of the two Indian wedding seasons. The first, mentioned above, starts in November and ends in December. The second starts in late March and runs through into early May.
Good luck trading.