Gold lost $46/oz. last week to close at $1,245.60 and, while it might not feel like it, gold is still up $43.70 for the year. My price forecasting model generates a target of 1,206 for this decline. Seasonally, gold tends to make a bottom of undetermined degree in the period from June to July.

This year, inflation expectations have me wondering if gold might bottom earlier rather than later during the two-month period. In the chart below, inflation expectations (blue) show a large jump-up this spring and can be seen at the right. Inflation expectations are highly correlated to the price of gold and have a tendency to lead gold at bottoms. They’ve gotten a big lead this time (bigger than most instances) and I have to believe that the only thing holding gold down is waiting for seasonality to be right for a bottom.

Another week like last week would get gold to my price target. I find two different Middle Sections pointing to lows on Friday June 13 and Monday June 16.

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Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

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