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Greetings!
Make no mistake: the precious metals markets fell under tremendous pressure in trading activity this week. Gold quickly plunged through any kind of psychological support at $1700 per ounce and slowly made its way towards $1600 per ounce. On an intraday basis gold gave back close to 61% of the gains achieved during the first rally of 2012 in which we witnessed gold prices move from 1522 almost $1800 per ounce.
A 61% retracement would have taken gold to 1624 per ounce, very close to its intraday low of 1635. There seems to be a push pull scenario developing in the precious metals markets as investors use gold as a safe haven investment and a risk on-risk off investment.
With the U.S. dollar continuing to gain strength, and the U.S. equities markets breaking through 13,000 on the Dow, investors have a multitude of areas to place their investment dollars besides gold. The upside with a strong equities markets is that there is no need to liquidate gold holdings to cover any type of margin calls for other investments. It also needs to be noted that there is a real potential for economic growth in the United States as recent reports have shown.
All in all, today's video will look at the technical side of the precious metals markets, which indicate a potential bottom in the market based upon Elliott wave theory. According to our current count which we will review in detail in today's video, we have just concluded a corrective wave "2." This corrective wave is typically the steepest or most dramatic of the two corrective waves (2&4), typically taking a market to a 61% retracement. This is exactly what we witnessed this week. It is therefore still my belief that we will begin to see higher prices in the precious metals markets in the weeks and months to come.
Wishing you as always good trading,
Executive Producer
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