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Correction Could be Coming For Gold

Everybody these days likes gold to keep going up, but not everyone is so convinced about the trajectory of its path.

Gold bars
Tom Grill | Iconica | Getty Images
Gold bars

Jim Rogers is the latest of the big-name investors to make a strongly bullish call on the yellow metal, predicting Monday on CNBC that it will hit $2,000 in the next decade.

That’s not exactly a daring call, considering it would only require a 5 percent gain per year, but it’s still assurance that gold should be an essential part of all portfolios.

Less clear is when a natural pullback will come for gold.

Hedge fund manager Dennis Gartman, in his Gartman Letter, called Tuesday for a retreat of up to $100 an ounce in the next several weeks.

“We can assure everyone that we are not bearish of gold,” he wrote. “We are, however, suspicious of buying more gold here at the current levels and we are reasonably confident that gold prices might well fall $80-$100/ounce sometime in the next several weeks and yet having nothing done to the sustainability of the long bull market in gold.

"Indeed, an $80-$110/ounce decline would return the market to greater health. We’d welcome that.”

There certainly seems to be something brewing.

Traders and chartologists tell me that gold only needs to hit $1,350 — a mere 1.5 percent gain — to indicate a technical breakout level. At the same time, it would have to breach $1,280 — a 3.8 percent drop — on the downside to break a parabolic pattern higher.

“Everybody and their brother is on the bandwagon now,” says Kathy Boyle, president of Chapin Hill Advisors in New York, who plays gold through the SPDR Gold Trust ETF . “Short-term I think it is extended. When you look at these charts you do start to see some distribution happening — not massive. The daily chart still looks pretty strong through it’s showing some chinks in the armor.”

Still … the metal is up nearly 16 percent since hitting its Golden Cross — the 50-day moving average passing above the 200-day moving average — on April 8.

There has to be a correction in here somewhere. Right?

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