The picture has changed for gold. First of all, the U.S. appears to be considering military action in Syria. Second, traders are becoming more skeptical of the idea that tapering is imminent. And between Syria and the evolving thinking about the Fed, December gold futures have gotten pushed up to a 2½-month high of $1,423.
However, gold is now approaching significant technical resistance around $1,428. I believe the push higher in gold will begin to lose steam, and present the opportunity for a contrarian play. For one thing, it's hard for me to believe that the current administration will formulate an aggressive military plan. After all, the public certainly does not appear to have the appetite for it.
(Read more: Gold jumps on possible strike against Syria)
At current levels, gold is probably pricing too much pessimism, and I would be looking to sell December gold at $1,422, with a downside target of $1,387. A settle above $1,435 would convince me that I was wrong. If deterioration of economic data begins to accelerate, that could also throw a wrench into the short gold position, so it should be monitored closely. But remember, the question is not whether there are solid fundamental reasons to buy gold. Rather, the question is: Are those reasons being exaggerated at the moment?