Gold failed twice at $2475… time for a 3rd attempt?

Gold has perked up in the past few minutes, rising a few dollars to $2430.

That comes after a large gain yesterday and a series of higher lows over the past month. Those are reasons for optimism.

However the main feature on the daily chart is a double top near $2475.

So higher lows vs a double top? Where do I come down?

A couple things sway me towards the bullish camp.

1) The pattern may be more of a consolidation from $2360-$2475 than a double top.

2) Speculative position was washed out.

Gold had a rough ride late last week and on Monday as global markets turned ugly. I’ve often highlighted that gold does well when things are bad but not when they’re really bad. That was the case Monday as the Nikkei fell 12%, US tech was beaten up and the VIX hit 60.

That triggered a run on specs, which were at eye-watering levels in the weekly CFTC report:

I would guess we will see a further drop in gold specs in the CFTC data due out later today. That will show that some of the speculative froth has been removed from gold.

The one thing that makes me cautious is the Middle East. The market has still priced in some chance of an Iran-Israel war or some wider hostilities but that’s looking less likely. It’s always tough to gauge how much of a geopolitical premium is priced in but I still suspect it’s higher now rather than lower.

Ultimately, price action will be the arbiter but with the US headed for a rate cutting cycle and the economy slowing, there case for buying gold dips is solid.