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I’ve been tracking something in gold that’s got me stepping back even though I remain long-term bullish.
We’re looking at one of the longest bar counts in history that gold has stretched this far away from critical moving averages. This isn’t just about price being elevated — it’s about the unsustainable nature of this rally structure.
Let me explain what I’m seeing and why it matters for your positioning.
The Overextension Nobody’s Talking About
Gold’s maintained extreme distance from both the 144-day and 200-day moving averages for an unprecedented duration. We’re talking about both time and distance here — the bar count away from these levels is historically extreme, and the actual price distance is equally stretched.
Here’s what this typically means…
Either gold consolidates sideways and lets those moving averages catch up before another leg higher, or we see a pullback that brings price back into alignment.
Those aren’t just theoretical possibilities — they’re pattern-based probabilities from decades of market behavior.
The likely retracement zones? I’m watching $3,400 as initial support, potentially extending down to $3,000 if weakness accelerates. Yes, I know that sounds dramatic when gold is trading near all-time highs at $4,100, but that’s exactly the point.
Every asset that goes parabolic eventually crashes with a sharp top rather than an orderly decline. We’ve seen this pattern repeat recently in lumber, cocoa and copper. When something goes vertical, the reversal tends to be aggressive, not gradual.
How I’m Positioning for What’s Next
I’ve been in gold for the past three years, and it’s been a fantastic run. But there’s a time to chase and a time to be patient.
Right now calls for patience.
Gold and silver are must-haves in the portfolio from an allocation perspective — I’m not abandoning the bull case. But buying gold at $4,000/ounce when it could pull back 15% to 25% before the next leg higher?
That’s not a risk-reward setup I’m willing to take.
My approach right now is simple: I took profits at recent highs, and now I’m looking to accumulate more by taking little nibbles and building my position back up on weakness.
That’s how you trade overextended markets — you don’t chase them.
The traders who get excited and chase parabolic moves are often the ones who end up holding through the sharp reversal. I’d rather wait for better entry points and scale in methodically than force trades at stretched levels.
Gold’s long-term bull case remains intact. But short-term dynamics favor patience over aggression. When this correction comes — and given these historic overextension metrics, I believe it will — that’s when the real opportunity emerges for building positions that make sense.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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