Gold reacting from $1192/1200 means wait for pullback to complete before next great buy

Sometimes you get a real good reaction from a Fibonacci number which gives confidence that it's working. Gold has done that by doing that overshoot of $1192 and even $1200, then dropping sharply. Many had been identifying $1200, and the area about $1192-1200 even looked right based on relatively near-term Fibonacci extensions of the rise from $681.
Egyptian scarab artifact; Guillaume Blanchard, July 2004
From the Fibonacci perspective, I had derived the $1192 from a "bullish butterfly" pattern on the monthly charts. That means that I - and undoubtedly others - had that level as a long-term price target. I do wish I'd known about such Fibonacci patterns years ago, when gold was in that trough and under $300! Still, it helped coming up from the more recent correction lows, even though I'll admit to being startled about the parabolic thrust it made to reach the target. But now what?!

That Fibonacci pattern doesn't guarantee what happens next. There are at least two competing Elliott Wave views of gold, and I'm thinking there actually can be a few more alternatives. First, there's a very bullish view in which gold may experience a mild pullback - for this scenario, we'd expect to see it get support at one of the trendlines and could measure off Fibonacci levels for a retracement. The technical indicators will also help tell the story. Another, bearish view is that gold has topped a large B wave or perhaps third wave, and will experience a big correction that might retest or go under the $681 low, or consolidate remaining somewhat above that level but without being very bullish for a while. I really prefer to give it some time to show some clues by how it continues with the reaction for awhile.

Meantime, my inclination is to hold short with a stop at the high just made. That's close enough and assuming I'm not stopped out, I'll be able to observe when a move down looks like it's ready for support or a trend reversal to go back up again. Short-term it already halted at nearby moving average and prior swing low price support. So while I won't count on a serious bounce just yet, I won't be surprised if it already starts to bounce a little on an intraday basis.

Big-picture, there's no reason to believe seriously that gold shouldn't be a good investment in terms of its price chart potential. So I wouldn't go getting rid of physical gold one might be holding. But "gold paper" like GLD is another matter since it's so easy to trade! The approach over the long term should be looking for the next great buying opportunity, which could possibly be weeks or months away.