Gold's Bearish Reversal Marks A Triple Top... For Now

London (Sept 26)  Gold peaked at $1350 two weeks ago. Its weekly chart shows a bearish reversal. That is not good news for gold bulls. For now, the bear market in gold continues... until proven otherwise.

Gold's bearish reversal is shown on the chart with the black arrow. The $1350 level marks a triple top, heavy resistance which goes back to 2014. Not any market can easily break out of that type of resistance - that is a natural law.

We identified a safe haven play early September, as explained in "Safe Havens On The Rise," but that trend seems to be weakening now. We wrote in our article that a breakout in the gold market would validate that trend. However, a failure would mean the safe haven trend would not be that strong. With gold's bearish reversal, the odds favor a risk asset play rather than a safe haven play. The yen and U.S. Treasuries are also weakening. For now, the mega breakout in gold is invalid.

What's next for gold?

Gold can now do a couple of things, and it bears watching which direction it is going:

•One possibility is that it falls just a little bit lower, and sets a higher low at $1225. That would suggest the safe haven play would be intact. We will find out about that scenario in just 2-3 weeks.

•Another possibility is that gold continues lower and falls towards the lower area of the falling channel at $1100.

•A third option is that gold starts a longer-term consolidation pattern. That would be a transition phase from a bear market to a flat market. It would build a base for a new bull market later in the future.

At this point in time, we have a hard time reading where gold exactly is going. From an intermarket perspective, the safe haven play was a clear one, but it could well be that the risk asset play remains dominant. There are simply not enough signs of a clear trend currently. In such a scenario, smart investors give the market the time it needs to "sort things out."

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