Gold did exactly as predicted in the update last weekend – it dropped back briefly to touch the bottom of our short-term reaction target range at $1680 before rebounding, as we can see on the 4-month chart below, and we were buyers around $1705 and below. The rebound on Tuesday left behind a clear bull hammer on the chart, which is positive. After the rebound gold advanced to the next resistance level shown, which may force another reaction this coming week, especially as Commercial short positions, which are still overall bullish, rose significantly last week – any such reaction should again be bought, although with downside volume now lighter than upside volume and silver now looking set for another upleg, there may be no reaction at all.