Gold: to buy or not to buy?

Technically, gold was overdue for a correction and the charts show it. Technically, the US$ was due for a rebound as it's oversold and short covering must take place at some point. The market just needed an excuse.

Fundamentally, gold is an asset and still a hedge against inflation as the US$ will continue its long term slide due to oversupply, this is after a brief rebound (which could last up to several months).

At this moment, we can only identify price levels which are strong supports and see if they hold or break. Currently, the next band of strong support is US$1,020 to US$1,040. If that breaks, it would be US$990 to US$1,000. We want to see price bouncing of a support and closing convincingly above it. It needs to be confirmed in the following sessions, hopefully forming higher lows and higher highs till the next resistance level is broken.

If gold does go below US$990, it might be a whipsaw as I feel that US$990 is a level that should hold as it is a level that was a many times tested resistance and should be a strong support. If US$990 breaks convincingly, gold would be headed much lower. It would spell the end of the uptrend for gold, for quite a while at least.

However, the longer term trend of gold is up and the longer term trend of the US$ is down. I do not doubt that.