Gold made the long anticipated break to the downside this week. Some of the indicators are short-term over-sold, so we expect a bounce, but the fundamentals are still in place for further downside (chart below).
The very long-term view continues to show downside probabilities for gold, similar to the 2000-2001 era. (chart below).
The futures traders are reducing their short positions and the speculators are reducing their long positions. Both positions, however, remain historically high. This continues to support a high probability of further downside in gold (chart below).
The long side of the trade is still crowded, and the exists are still narrow. Expect further downside for this falling knife.
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