So much for the correction in gold

Over the weekend, I foreccasted gold would correct below $1000 after peaking around $1020 last week. My rationale was twofold and the usual:
1) the commercial bullion banks increased their short positions to all-time highs. Undoubtedly, many were naked shorts with no physical gold backing them.
2) the long gold trade was getting crowded with gold surpassing the psychologically important $1000/oz. threshold.

The only question was how low gold would correct to. Based on previous dips, the charts favored a move back down to $950. The caveat was that too much buying pressure from China and other Asian countries, as well as nervous investors worldwide would prop up any declines.

Sure enough, gold briefly corrected below $1000, and sure enough rebounded this morning in New York's COMEX. Tonite, in Asian trading, gold is surging up $10, testing the $1020 highs.

This signals a change in the gold and silver marketplace, in my opinion. Not only has sentiment changed to a bullish tone for precious metals, but the corrections and rallies have also taken on different dynamics. Violent price declines spurred on by the commercial shorts are met with equally violent upswings. There are no steady climbs. Each decline has triggered a vigorous upward response.

Precious metals markets have always been volatile, and the recent volatility isn't necessarily greater, but the longs seem to be responding quicker, meaning big funds are behind the powerful rallies, not just retail gold bugs. The long positions now have juice behind them. The Goliath bullion banks now have a more powerful foe on the other side of the trade--they can no longer whipsaw the star-crossed retail gold investors. The counterparty longs are now hedge funds and sovereign funds with deep pockets. The stakes in this tug-of-war just got a lot more interesting.