Abigail Doolittle: Still Some Downside in Gold

Abigail Doolittle, at Peak Theories, sees short-term strength in the dollar against the euro and further downside in gold.

With regard to gold, she sees a relatively new topping pattern that may bring gold to about $1,400 per ounce.

Keep in mind that Doolittle warned early on that the commodity complex was going to crumble. She saw it developing in February.

There was an opposing view from an anonymous EPJ commenter:

Please have her update Silver so I can fade her....lol

Who is laughing now?

I asked Abigail whether she thought the current downside activity is part of a new bear market or simply a correction. This is her response:

I view the current sell-off in commodities as a 15-25% correction that may come to feel more like a collapse due to its potential speed and also due to the fact that some of the commodities – notably silver and cotton – declined 30% in just days.

I then asked her when she thought upside activity will return:

Relative to possible and sustained upside trading activity, I tend to believe the frothy QE2 commodity gains have to be given back first and this will take months at least and then the stage needs to be set for a less speculative demand picture. 

Of course, Bennie and his monetary jets ultimately controls on a long-term basis, but it always makes sense to look at short-term technical influences. And, don't mistake a short-term technical uptick in the dollar to mean there is no further downside for the buck. Long-term there is nothing but downside for the dollar, for as far as the eye can see.