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His Gold Calls Have Been Quite Accurate; Now He's Calling The Bottom

It seems the best way for investors to make money in the gold market lately is by being on the bearish side, but according to one analyst with a strong track-record, this trend could change.

“Gold dropped 5 weeks in a row after my May 29th bearish call. All indicators tell me that a trend reversal is imminent,” noted Lejun James Shao, founder of, in a Seeking Alpha post Wednesday.

So far this year, Shao’s gold calls have been “quite accurate,” as he put it.

In late February, he turned bearish on the metal, which then fell lower for nine consecutive trading days to hit $1,201.90 an ounce. Then in mid-March, he turned bullish and prices ran up to $1,289.10. The same trends can be seen for his calls at the end of April and mid-May.

Even if Shao was slightly off in his May 29 bearish call – when gold prices went within striking distance of $1,300 an ounce – the market did turn south quickly after.

His latest call?

“I am now making the call for a gold bottom,” he wrote.

He said gold’s key support level right now lies at $1,200 an ounce and below that, at $1,190.

“But I have reasons to think that gold will not fall below its current support and will rebound from here,” he said. “After today's drop, its technical indicators all fell into deep oversold territories: Stochastic reading at 4.04, a low never seen before and at a possible double bottom. RSI at 31.46, is the lowest reading this year.”

Shao added that the U.S. dollar, which has been weighing on the yellow metal, might not be of much concern either.

“Please be noted that gold’s recent weakness is not due to strong US dollar. US dollar is still in a clear downtrend and it dropped from 97.44 to 95.99 in the last five weeks,” he explained.

To confirm his call, Shao said he’s closely watching the price of SPDR GLD -- the world’s largest gold-backed exchange-traded fund.

“If GLD can break out the 118 level, the real trend reversal will be confirmed,” he said.