Gold managed to break the line in the sand together with an important bearish trend line coming from the heights of May. The latest release of the COT report (below) shows that we may have a bottom in place because the net short commercial traders positions increased while gold rallied. Therefore, gold looks very bullish at the moment.
Still, we have the same warning sign I wrote about before: the open interest which is easily falling while gold rallies. If we are to see a strong bullish trend ahead, we should have an increase in the open interest as well, which means opening more long positions (more bullish confident traders) accompanying the rise in gold price.
Nevertheless, the technical setup is bullish and the first target (almost reached) is around 630 where we have the 61.8% Fibonacci retracement of the last sell off (676 - 559). Only after this resistance is fully breached, the next target becomes the full retracement back towards 675 - 676. The last resistance 600 now should become support.
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