Gold is down just better than 7% from its highs in the last 4 months as prices have been trending down as seen on the chart above after topping out near $1800/ounce in October. Identified by the down sloping trend line futures have been unable to take out the trend line and one can see that the 50 day MA has also thwarted upside on multiple attempts since late November. Short term I think it is feasible to see a lower trade as April futures may probe the 61.8% Fibonacci levels approximately $25 lower than current trades.
The closer prices get to $1600/ounce the more aggressive of a buyer I would become for clients. I like vertical call spreads or selling puts once we see a trade lower if that plays out in the coming weeks. Looking at the big picture the trend remains up looking out several months but further downside is expected first. An underlying theme short term is as the dollar appreciates I would anticipate an inverse relationship to play out. Gold is not the only metal I think could see downward pressure as I believe both silver and platinum could trade lower in the coming weeks. For gold to shine in 2013, we must see the market accept that the prospect of inflation is likely. Even if the CPI and PPI do not show underlying inflation, if you?ve fueled up your SUV or gone to Whole Foods lately, consumer goods do not appear to be getting any cheaper.?