Love gold for Valentines? We do too, buying lows in coming days/weeks

Love gold - and why not now, as it's Valentine's Day - and price has pulled back from the highs?! We basically love it too, as a long-term investment. There are some Elliott Wave types who claim it will drop way down, but there's Tony Caldaro's Objective Elliott Wave view (see his Elliott Wave Lives On site in list at right) which is very bullish - informed by a very healthy skepticism about currency devaluations which do much to drive the price of gold much higher. But is it time to buy now? We do want to be buyers over the coming days or weeks, looking for signs a good low has been made. So let's take a look.

Cyclically, we're expecting a low to be put in by the time we also want to see the next high in equity indices, meaning May. There seems a loose inverse relationship over time between stocks and gold. There's also an idea I've seen Tony Caldaro mention, that assuming the dollar drops much lower, that can send stocks reflexively higher first, then bring them down probably due to financial jitters. Well, enough of theorizing how it will work in - we already know financial concerns of one sort or another will help propel upward. It just got overbought as it peaked into long-term Fibonacci projections around $1200. Has the overbought condition been worked off? It's actually become somewhat oversold. While I share the view that it can be positioning now to come out of recent lows to trend up again, I do harbor concerns that the wave pattern is different from Tony's view. Maybe I'm just allowing for the possibility that events can turn (like if the dollar makes a surprise move higher, to 82 $USD or higher), and change the wave count to create a lower level on the pullback.

I've described before that I can allow gold to get to its 200 dma and test closer to the prior swing high around $1034, or lower support levels around $1000-1007. (If for example, the whole move to $1200+ was a wave 1 off the $681 as a wave IV.) It could even get to $950 (perhaps as a lower wave 2 type pullback), though I'm starting to doubt it will get that low - but possible. At $950 I'll still buy, but under $950 I'll cash out (maybe short it too) because another alternate view is that it retests the $681 low. (The "wave C" idea if $1200+ was a wave B and the prior $681 was wave A.) That idea isn't my primary count though. My primary view is the pullback possibly to $1030, $1000 or $950, then buy and hang on for the next huge move up!

Technically gold is still under the Bollinger Bands midline, and giving hints it wants to turn. But with time time window for the cyclic low so large - still two and a half months within which the expected low will be made - I'm not ready to buy aggressively. Let's let this love affair with gold remain in the anticipation stage for a while longer, until we can be more certain it doesn't want that 200 dma test first. If it does move over the Bollinger Bands midline, okay, we'll start using that midline MA as early warning whether it's getting buying support. Otherwise if we do see the lower levels I've mentioned, we'll start testing in with looking for trading buy patterns triggering (higher highs and lows with better buying volumes). I'm guessing that's more likely to happen at those lower price levels over the next several weeks.

So we'll see. If we can have more certainty we're getting a good price for long positions, then we'll love where gold takes us next, all the more.