DiscoverGold
13 hours ago
Gold Struggles Amid Technical Challenges
By: Bruce Powers | April 29, 2024
• Bearish flag forms, increasing retracement risk. Drop below 2,320 triggers breakdown.
Not much of a change for gold on Monday as it continues to attempt to advance from the 2,291-swing low hit last Tuesday. Although it is on track to close in the top quarter of the day’s range with a bullish hammer candlestick pattern it remains stuck around the 20-Day MA and a top rising trend channel line. Since the low last Tuesday, it has managed to complete a 38.2% Fibonacci retracement but not much higher. Together, these are some of the technical factors that continue to weigh on the price of gold.
Downward Pressure Remains
The longer gold attempts and fails to rally, the greater the chance for a retracement lower. There is now a clear bear flag that has formed on the daily chart for gold. Today’s low of 2,320 provides confirmation of the lower parallel line of the pattern. A decisive breakdown from today’s low triggers the bearish pattern. If it occurs the 2,291-swing low will be at risk of being broken as the next lower support zone is around 2,261 to 2,255, derived from two Fibonacci levels.
Further down is the target from the bear flag. It comes in around 2,238, which is below the 2,255-price zone but above the next lower price zone from 2,212 to 2,208. Notice that both an uptrend line and 50-Day MA are included in that lower price zone. The 50-Day line matches the top of the zone. If the 20-Day MA is broken to the downside the chance of reaching the 50-Day increases.
Downside Risk Remains if Higher Prices Stay Within Flag Boundary
Regardless of the potential for a deeper retracement, the possibility for an upside continuation remains. A decisive breakout above Friday’s high of 2,352 would be needed for bullish signs followed by a daily close above that price level. If this bullish scenario unfolds, keep in mind that higher prices that trade inside the rising parallel bull flag, remain within the flag.
The flag may expand yet remain bearish if trading continues inside the two rising parallel lines of the flag. A daily close above the top flag channel line would be needed for a clear bullish continuation signal.
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DiscoverGold
DiscoverGold
2 days ago
Is it too late to invest in the gold rush?
By: Financial Times | April 26, 2024
• Demand from China drove prices to a record high this month — now many suspect the normal rules no longer apply
On the High Street in Hungerford, a historic market town about an hour west of Reading, is Nigel Montgomery’s stamp and coin shop.
He has traded precious metals for about 50 years, but has never seen a gold rush like this: the price of a troy ounce, the unit used to weigh precious metals that dates to the Middle Ages, hit an all-time high this month, above $2,400.
“We’ve never seen so much retail demand as we are seeing at the moment,” says the 67-year-old. “I’ve been through various gold and silver booms since the 1970s — we’re seeing a more sustained, stronger and genuine rally.”
Investors have snapped up tax-free capital gains in gold sovereign and Britannia coins to hedge their portfolios against inflation and any escalation of conflict in the Middle East. So much so that Montgomery is continuously having to replenish his stock.
But the origins of this gold rush are thousands of miles from Montgomery’s town — and far from the historic global trading centres of London, Zurich and New York — in Beijing and Shanghai.
The People’s Bank of China led record gold purchases by central banks in 2022 and 2023, collectively buying above 1,000 tonnes each year, as emerging markets sought to diversify their reserve holdings away from the US dollar, which was weaponised by Washington in sanctions against Russia after its invasion of Ukraine.
Chinese retail investors have amassed gold as other investments from property to local equities turn sour. Chinese hedge funds and other speculators have also piled in.
“This rally has Chinese characteristics written all over it,” says John Reade, chief market strategist at the World Gold Council, an industry lobby group. “Everything leads back to different actors in China.”
While punters in Hungerford and at Costco stores across the US go gaga for gold, the western investor has, by and large, sat on the sidelines of gold’s latest rally. Gold-backed exchange traded funds (ETFs) have continued to experience monthly outflows, while bar and coin demand has been abysmal in Germany, typically the world’s third-largest market.
Andreas Habluetzel, chief executive of Degussa Goldhandel, Europe’s largest gold dealer, which owns London’s Sharps Pixley, says the cost of living crisis and stubborn inflation is driving customers to sell.
“We all want to keep the same lifestyle: sending your kids to good schools and owning two cars. When we talk to the middle-income people they are liquidating as they need money,” he says.
That creates a dilemma for the western armchair investor. Gold has rallied some $600 per troy ounce since conflict erupted between Israel and Hamas in October, yet the staggering rise is widely seen by analysts as disproportionate to the gold price’s usual drivers: real rates on US Treasuries, the dollar and ETF flows.
“This is not the behaviour of gold. It’s more or less the behaviour of crypto,” says Habluetzel.
When the asset is so volatile, should investors rely on it as a haven asset? And if the market’s centre of gravity is shifting to a set of investors in China with a fundamentally different set of concerns to your own, should you bank on backing bullion?
From a tactical perspective, gold’s sharp rise could make it poised for a sharp correction, having already fallen about $50 this week, making it a dangerous entry point.
But others argue gold has a cohort of buyers waiting in the wings for any dips to pile into gold — including western ETF investors that have not participated yet. Deutsche Bank analyst Michael Hsueh says that it is likely that “any profit-taking by early investors would be replaced by investment from those who have so far not participated in the move”.
Looking further out, the question for investors is whether they believe the global monetary system is at the early innings of sweeping transformation. That might be a new era of persistent inflation that erodes the purchasing power of fiat currencies and great power competition that increases gold’s share of reserve assets at the US dollar’s expense.
Max Belmont, portfolio manager of the Gold strategy at First Eagle Investments, an asset manager, says that gold is “sniffing out” mounting concerns over the sustainability of global debt levels.
US debt increases by about $1tn every 100 days or so with interest rates at their current levels, while investors fear Europe could struggle to manage debt levels if Donald Trump enters the White House and pushes for Nato defence spending to rise. The IMF warned this month that the US, China, Italy and the UK “critically need to take policy action” on debt. Neither US presidential candidate shows much sign of wanting to rein in spending.
Nicky Shiels, precious metals analyst at MKS Pamp, a Swiss refinery and trader, says surging gold prices anticipate a “big regime change the west is going through”, from erosion of US dollar purchasing power, higher-for-longer inflation and a multipolar world.
When it comes to US debt, she says the market has grown increasingly convinced that the Fed may cut interest rates even if inflation roars higher in order to reduce the interest payments that the US government is servicing (the Fed is independent of the Treasury).
“This is it: two decades of easing monetary policy coming to a head,” she says.
On the other hand, emerging market central banks and sovereign wealth led by China, Russia and the Middle East are buying gold after the US sanctioned billions of dollars of Moscow’s reserves held in US bonds.
“It’s the dollar losing utility as an asset to store trade surpluses,” says John Hathaway, managing partner of Sprott Inc, a Canadian asset manager specialising in metals. Gold has traditionally tracked real rates of US Treasuries but he adds that “the Fed’s policies may not matter anymore to gold prices” given the new club of buyer’s motivations.
And Chinese investors are taking cues from their own central banks’ purchases. “An awful lot of private wealth is going to be running into gold as there’s nothing else to buy: property sucks, equities lose you money, cash in the bank is paying nothing and they can’t get the money offshore,” says Adrian Ash, director of research at BullionVault, an online gold marketplace.
But others say geopolitical risks, the dollar’s demise and debt concerns are over-egged.
“The world is not nearly as risky as [in] 1980,” says James Steel, chief precious metals analyst at HSBC, when gold hit its inflation-adjusted record high well above $3,000 per troy ounce.
For retail investors concerned that they missed riding the wave of frothy gold prices, one option could be gold mining equities.
Valuations of the world’s gold producers, led by Newmont and Barrick Gold, have rarely been as heavily discounted in the past 40 years versus the gold price as they are now, according to asset manager Schroders. That has made the gold mining sector’s collective valuation at roughly $300bn no bigger than Home Depot, the US DIY retailer.
The theory is that lofty gold prices will feed through to higher margins when gold producers next report earnings, sending share prices shooting up.
“It’s a different risk-reward. If gold prices double then you should get a bigger increase in your margin,” says Robert Crayfourd, who manages the Golden Prospect Precious Metals fund at CQS, an asset manager.
Jim Luke, fund manager at Schroders, wrote in a recent note that “dismal western sentiment” on gold and poor operational delivery by the sector’s leading companies were behind the low valuations.
“It is not hyperbole to say the sector could rally 50 per cent and still look inexpensive,” he says.
Gold mining equities face structural challenges from their ESG credentials, as they play little role in the energy transition, rising political risk in cash-strapped developing nations from Mali to Mexico and declining reserves.
More troubling, however, is that this gold rally has been driven by the Chinese central bank, retail investors, asset managers and funds for whom western gold mining equities hold little appeal.
Investors have been deterred by the sector’s inability to tame cost inflation from vital inputs such as fuel, explosives and cyanide in the past couple of years and overspending during previous booms. Fund managers want to see proof that margins will march higher.
John McCluskey, chief executive of Alamos Gold, a mid-sized Canadian gold producer, says that the tech-led run for equity markets, with the Dow Jones breaking above 38,000, makes it hard to call when gold producers will get a look in.
“‘The party is going full tilt. I think I’ll go home to check the gas is on’ — you’re not going to do that now. ‘I’ll stick it out and put it in these gold funds that haven’t performed well for 10 years’ — you don’t do that,” he says. But, he adds: “When they see the margins then they will buy those equities.”
Jason Todt calls himself one of the new breed of “retired gold bugs” who are partying hard.
After the global financial crisis, the manager of a car dealership in Missouri spent $100,000 from a property sale on gold. Had the 47-year-old held on to all of his bullion until now, it would be worth $120,000. Instead, Todt earned $1.5mn by selling $65,000 of his gold hoard in 2017 to buy bitcoin and other assets, enabling him to retire early in 2020, meet his Ukrainian wife and travel the world in a sailboat.
“It has taken seven years to get a 100 per cent return on gold when you can do that in bitcoin in a year,” he says.
Jason Todt and his wife Evgenia Grydnieva on their sailboat, moored in Gulfport, Mississippi © Bryan Tarnowski/FT
Todt’s situation highlights the pull for many investors of potential mega-returns through cryptocurrencies, AI and tech stocks over the pursuit of wealth preservation.
Laith Khalaf, head of investment analysis at AJ Bell, warns that even for those trying to cling on to their wealth, gold often fails to fulfil its “safe haven” reputation because it is volatile and trades sideways or downwards for long periods of time.
“It shouldn’t be a big part of your portfolio,” he says. “No more than 5 per cent.”
But the wealthy of the world appear to disagree. US funds, family offices and asset managers are increasing gold’s allocation within their portfolios to 10-15 per cent, up from 5-7 per cent, says Habluetzel of Degussa.
That is underpinned by gold’s long-run ability to preserve wealth — if bought at the right time. Since 1970, when US President Richard Nixon untethered the dollar from gold, bullion has produced an average return of just below 8 per cent a year, says Peter Clark, a retired fund manager.
For Montgomery in Hungerford, gold is a must-have insurance policy for investors to protect themselves against an end to the equity and crypto mania.
“If we had world peace and a more stable economy, gold would be steady or go down,” he says. “But the world isn’t a stable place. People have had a really good run on the stock markets and property prices have kept going up. What’s left? It’s gold.”
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DiscoverGold
DiscoverGold
2 days ago
Gold Falters, Treads Water
By: Mark Mead Baillie | April 28, 2024
Per a tongue-in-cheek note this past week to our StateSide Investors’ Roundtable, we apologized for single-handedly having “crashed” the precious metals’ markets with last Saturday’s missive (“Gold Fit to Pull Back a Bit”) following which on Monday — directly out of the chute — the yellow metal suffered its third-worst intraday high-to-low loss (-2.7% or -$62/oz.) in better than 14 months…
Too, Sweet Sister Silver’s simultaneous stint saw a -5.7% slam. Damn!
We nonetheless plead innocent for merely going with the math, a valued leading science which few anymore seem to do. For recently we’d written ad nauseum: “…near-term Gold is very over-extended; but broad-term Gold remains very undervalued…” And for you WestPalmBeachers down there, “near-term” plays out prior to “broad-term”, the former being exactly what Gold is now enduring, (i.e. ’tis going down). Or for those you scoring at home: mere math + historical repetition = leading knowledge. Hardly the “holy grail”, but given prudent cash management, ’tis on balance beneficial to one’s trading account. “Try it, you’ll like it!” –[Alka-Selzer, ’72].
Oh to be sure, Gold through just the first third of this year has already achieved our forecast high of 2375, indeed reaching up to 2449, albeit price settled yesterday (Friday) below both of those levels at 2350. And whilst we’re on record to not upwardly re-forecast a revised target, we’d be surprised should Gold not trade higher still as the year unfolds, even if the Federal Reserve raises rates. ‘Course, you regular readers know we’ve be musing since the start of this year over the Fed actually needing to again raise rates, contra to the non-math parroting crowd’s having called for as many as three rate cuts during 2024, (such expectations having lately been reduced to just one cut toward the end of the year).
But even should the Fed dutifully raise, such move — as we’ve in the past shown — wouldn’t automatically deter Gold from moving higher. Recall the three-year stint from 2004 through 2006: the FedFundsRate rose 425 basis points … and Gold rose +69%.
Thus whilst Gold is positioned just fine (thank you very much), when it comes to the stock market, it seems as if we’re in a constant state of hand-holding. On days when the S&P 500 rises +1%, FinMedia responses range from neutral to happy. But toss in a -1% down day, and many-a-headline goes catastrophic:
• “Markets Roiled by FedSpeak!”
• “Markets Plunge on Powell!”
• “Markets Tumble on Earnings Trouble!”
Good grief. The telling optics are that the FinMedia folks today have no concept of “Roiled”, “Plunge” nor “Tumble”. They weren’t around in ’87, ’02, ’09, et alia. Reprise The Temptations from ’66: “Get Ready”.
And although we’re not predicting what would be a third -50% “correction” in just this century for the S&P, by math (oh-no, say it ain’t so) the setup is sitting there:
• Neither earnings nor yield are supportive of price;
• Twice as much money is invested in the S&P than exists (by “M2”); and
• Risk-free dough pays triple the S&P’s yield.
Back in “our day”, a stock was purchased to benefit from a methodically rising price based on earnings generation — plus for high-quality companies — a dividend yield. Today, stocks are purchased on expectations of their quickly quadrupling. ‘Tis why we regularly term this “The Investing Age of Stoopid”. Have a nice day.
Meanwhile, although April has been a losing month for the S&P, ’tis been a good month for Gold, as you know price having reached an All-Time High of 2449 (at precisely 07:15 GMT on the 9th). And with but two trading days remaining in April, ’tis close enough to month-end to bring up our BEGOS Markets Standings essentially through this year’s first quadrimestris. Therein, red-hot metal Copper –which a month ago had been sixth in this stack — is now leading the pack (a sign of continued inflation expectations), having even surpassed Oil, with Gold still on the podium scantly ahead of what is undoubtedly a pouting Sister Silver, just one-tenth of a percent behind in fourth:
Too, from the “Gold Plays No Currency Favourites Dept.” note that despite the Dollar Index being +4.9%, Gold nonetheless is +13.4%. (Just because “That can’t happen”, ’tis).
And as Gold indeed is “What’s Happenin’!”, let’s go to the weekly bars from one year ago-to-date, wherein we see the blue-dotted parabolic Long trend now eight weeks in duration. Moreover, in spite of last Monday’s price falter, Gold has since tread water by closing well off the week’s low (2304) per the closing nub (2350) on the rightmost bar:
Here comes the however: the near-term “math” suggests we’ll see lower levels still. For instance, we’ve the following two-panel display. On the left is a graphic with which by now you’ve become quite familiar: ’tis our BEGOS Markets near-term valuation (smooth line) for Gold based on its price movements relative to the other four primary BEGOS components (Bond, Euro, Oil, S&P). And at present per the lower left section, price is still better than +100 points above valuation. On the right we’ve Gold’s daily “candles” for the past 21 trading days (one month) wherein we find the parabolics having flipped to Short (per the red-encircled dot of last Monday). Such flip was anticipated in last week’s missive — (“Too from the technical tent, Gold…is approaching a flip of the daily parabolic measure from Long to Short”) — and so it came to pass:
In terms of how far further Gold may fold from here, the 2247-2171 zone appears structurally supportive, (i.e. a drop from here of another -100 points wouldn’t be untoward). And that technically trues up nicely per the above graphic wherein price is just over +100 points above valuation. See how easy this is? (Hopefully we’re wrong and Gold simply zooms back up the road).
Meanwhile: “How ’bout ‘dem miners!” Long overdue to get on the move, so have they been doing of late, albeit they too shall deflate should Gold near-term further slip from “Great!”. Indeed here’s our usual month-end chart of Gold’s year-over-year daily percentage track along with those of its key equities brethren. From worst-to-first we’ve: Franco-Nevada (FNV) -19%, Newmont (NEM) -9% (but sporting a very robust, earnings-induced up move this past week), the VanEck Vectors Gold Miners exchange-traded fund (GDX) +4%, the Global X Silver Miners exchange-traded fund (SIL) +7%, Pan American Silver (PAAS) +12%, Agnico Eagle Mines (AEM) +17%, and Gold itself +18%. As we go to the graphic, let us — for the equities — appropriately cue “The Agony and the Ecstasy”, –[Heston, Harrison, 20th Century Fox, ’65]:
Next we go ’round the horn across the past 21 trading days for all eight BEGOS components. The “Baby Blues” therein reflect the day-to-day consistency of each market’s respective grey trendline. And as noted in yesterday’s Prescient Commentary, there’s the old adage “Follow the Blues instead of the news, else lose your shoes”, which specific below to both Gold and Silver is yet another technical case for further price fallout near-term. But does that in turn mean we buy the Euro, its dots curling upward? Given the Federal Open Market Committee’s pending “do nothing” Policy Statement and Powell Presser (on Wednesday, 01 May), any “hint” of a rate cut delay (if not outright suggestion of a rate hike), ought only serve to further strengthen the Dollar:
Moving on to the 10-day Market Profiles for the precious metals, we’ve Gold (at left) and Silver (at right). Simply per this construct, there is quite a bit of overhead volume resistance with which to deal. Those prices levels of volume domination are as labeled:
And of course it being month-end (save for two trading days), here we’ve Gold’s structure across the past 16 years. Note the forecast high (2375) having been achieved (and then some), followed by price’s pullback. Still, we’ve added scaling space up toward 2600, just in case, (wink wink, nudge nudge…):
As for the StateSide Economic Barometer, the two most eyed items of the past week were the first peek at Q1 Gross Domestic Product and March’s Personal Consumption Expenditures. First to the GDP: its annualized nominal Q1 growth rate was +4.7% … but … +3.1% of such growth was pure inflation so the … net … real GDP growth was at best a tepid +1.6%. Again, can you state “stagflate“?
Second to the “Fed-favoured” PCE for March: both the headline and core readings maintained their +0.3% February paces, which when annualized comes to +3.6%, (nearly double the Fed’s targeted +2.0%). Can you say “raise“? Nevertheless, March’s Home Sales (both New and Pending) improved, as did Personal Income and Durable Orders, the Baro in turn getting a boost:
Notwithstanding our ever-ongoing aforementioned misgivings about the terrifically overvalued stock market as measured by the S&P (aka “Casino”) 500, note in the Baro the “live” price/earnings ratio is now 45.0x (by trailing twelve months) which as we near the half-way mark of Q1 Earnings Season hasn’t — on a cap-weighted basis — declined a material wit, (’twas 46.1x at the start of Earnings Season).
Yes, some 64% of S&P constituents have thus far reported year-over-year earnings increases: but that impossibly supports a P/E of such level, indeed nearly double that of a dozen years ago. Also, the “all-risk” Casino’s yield is now 1.413% versus the “no-risk” annualized U.S. three-month T-Bill’s 5.238%. And yet the week was replete with such FinMedia headlines as (hat-tip Bloomy) –> “Magnificent Seven Roar…”, “Big Tech Surges…” and “AI Craze Powers Best Week…” Thus the great game of “Equities Chicken” continues.
Oooh, and we shan’t then close without mentioning this from the “Which Came First? The Chicken or the Egg? Dept.” (Hat-tip NewsMax) –> Engineers from The University of Colorado “Go Buffs!” at Boulder have conclusive research that folks over the age of 65 tend to slow down as it takes more energy to move than it does those younger. Which has us seriously considering a new career in the field of such paid-for research of obvious conclusion.
Either way conclusively, don’t you be a chicken: use our weekly research to buy and hold Gold!
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DiscoverGold
DiscoverGold
3 days ago
Gold Faces Resistance, Risk of Deeper Pullback Looms
By: Bruce Powers | April 26, 2024
• Gold faces resistance at the 8-Day MA, signaling potential for a deeper pullback and bearish behavior.
Although gold has been slowly moving higher the past few days it encountered resistance at the 8-Day MA today with a high of 23,352. The 8-Day line has recently turned down, adding to the risk of a deeper pullback. The 8-Day line was previously an area of support and now it is showing signs of resistance. This is classic bearish behavior as a possible further retracement may be developing. Moreover, notice the relationship with the top channel line. Ire previously represented support but has been successfully tested as resistance over four days.
Drop Below 2,326 is Short-term Bearish
A drop below today’s low of 2,326 would provide an initial bearish signal that could lead to a test of the recent swing low at 2,291 and possibly a decline lower. If the 2,291-support zone fails to stop a decline the next lower target zone is from around 2,261 to 2,255. Two Fibonacci levels point to that price zone. Lower still is the 50-Day MA at 2,206. Further
Upside Potential Remains
On the upside, a breakout above this week’s high of 2,389. Would be needed to provide confidence that a rally may be able to continue higher and challenge the most recent record high of 2,431. Upside targets in gold remain. The question is will it enter a deeper retracement prior to a new high? The first higher target is the completion of an extended retracement at 2,462. It is followed by a price zone from around 2,480 to 2,488. The two-week low of 2,324 can also be watched for either signs of support or a breakdown. Certainly, it will provide a clue.
Watch for Additional Tests of Resistance
There may still be further tests of resistance heading into next week but the chance for a deeper retracement grows. Let’s consider the two recent sharp down days that reflected some degree of panic selling. The first was on April 12 and the second on April 22. If Friday’s high ends up being a swing high the chance for a further decline increases as well as the 2,212 to 2,207 lower target zone.
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DiscoverGold
5 days ago
Gold Short-Term Bullish Momentum but Resistance Looms
By: Bruce Powers | April 25, 2024
• Gold's outside day signals short-term bullishness, but resistance at the 20-Day MA and range around recent swing highs could cap gains.
Gold traced out an outside day today as it continues to flirt with the 20-Day MA as resistance. Earlier in the session gold fell to a low of 2,305 where it encountered support the led to an upside breakout above Wednesday’s 2,337 high. Today’s high was 2,345, at the time of this writing. Gold closed just below the 20-Day line yesterday and it continues to trade around the 20-Day MA.
Short-Term Bullish
Nevertheless, today’s price action is short-term bullish and could lead to higher prices if today’s high of 2,345 is exceeded. If today’s bullish action continues gold would be heading up into a range of resistance around the recent swing high. The 8-Day MA is at 2,352 and this week’s high is at 2,389. This would seem to indicate a rally will likely encounter resistance before gold exceeds the recent record high of 2,431.
Resistance Around 20-Day MA Remains a Concern
Resistance was seen today, as well as the prior two days, around a top rising parallel channel line that previously was part of a support zone. In other words, the market is telling us prior support, represented by the line, may now be resistance. That is a small clue showing weakening in price.
Further, the 8-Day MA has turned down for the first time since mid-February, and it another sign that the short-term trend is weakening. It remains to be seen whether that weakening continues. A drop below today’s low would be the first sign of it. The recent swing low of 2,291 would then be at risk of being tested again as support, and it may fail leading to a deeper retracement.
April Closing to Provide Clues
Considering the monthly chart, gold is currently trading around the halfway point for the month’s trading range. If it closes the April at or below the 50% level, which is at 2,330 currently, it will end the month in a relatively weak position. March completed with a large green candle that closed near the highs.
It shows strong upward momentum that marks a breakout of a long-term base. Given the long-term breakout, it wouldn’t be surprising to see gold end the month in a strong position, above the 50% level. This may increase the chance for a continuation of the advance from this week’s low.
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DiscoverGold
6 days ago
Gold No Progress from Bullish Setup
By: Bruce Powers | April 24, 2024
• Gold's price movement shows uncertainty as it approaches key resistance levels. A breakout triggered by a bullish pattern lacks convincing strength, while a bearish indication looms if the 20-Day MA becomes resistance.
There was little upside follow through on Wednesday, following a brief breakout above Tuesday’s hammer candlestick pattern. The high for the day was 2,337 and yesterday’s high was 2,334. Gold ended above the 20-Day MA on Tuesday following an earlier decline below it.
However, it is not yet clear where today’s close will be. Trading is happening around the 20-Day line at the time of this writing. A daily close below the line would be slightly bearish as it would be the first time the gold has closed below the line since the second half of February.
Watching for Further Signs
A bullish pattern breakout signal needs to have additional confirmation of strength following the breakout. Gold is already indicating that the hammer breakout is suspect given the relationship to the 20-Day MA. Also, the rise above yesterday’s high was minor and not convincing. It doesn’t show a clear improvement in demand. Further, notice that today’s high of 2,312 found resistance at a top channel line that had been part of a support zone until Monday’s sharp decline.
Tuesday’s Strength Needs Upside Follow Through
Tuesday’s low of 2,291 completed a 50% retracement level of the internal trend. The subsequent bullish hammer candlestick and daily close above the 20-Day line indicated that the retracement in gold may have completed. However, an upside breakout and subsequent additional signs of strength were needed.
The breakout has been triggered but there are not yet additional signs of strength. A daily close today above the 20-Day would be one sign, but minor. Then, another breakout above yesterday’s high followed by a daily close above it will provide additional confirmation.
20-Day MA is Key
Also, on the bearish side, a daily close below the 20-Day is a bearish indication. Further, today’s low of 2,312 could trigger short-term weakening as gold again approaches yesterday’s low of 2,291. If that low is broken to the downside, then a deeper correction is likely. The next lower target would be around the 38.2% Fibonacci retracement of the full swing that began from the February swing low. That price level is at 2,261 and includes the 61.8% retracement of the internal upswing at 2,255.
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DiscoverGold
7 days ago
Gold Intraday Bullish Reversal Shows Strength
By: Bruce Powers | April 23, 2024
• Gold completes a 50% retracement, rebounds to 2,334, signaling potential upside breakout.
Gold completed a 50% retracement today with a low of 2,291 before buyers took control and ran the precious metal up to a high of 2,334, at the time of this writing. Earlier in Tuesday’s session the sellers were in control and dropped gold down to below its 20-Day MA to test support around the 50% retracement of the internal upswing. The 50% level is at 2,289. That is close enough given the subsequent bullish reaction following that low.
Quick Recovery of 20-Day Line is Bullish
Since around February 23 gold has been trading above the 20-Day line. Today was the first direct test of the line as support since then. Although it failed to maintain support, gold may close above the line with a bullish doji hammer candlestick pattern. Both a close above the 20-Day MA is bullish, and the fast recovery of the line is also bullish. It points to the possibility that a correction may be complete, or at least for now.
Upside Breakout Above Tuesday’s High
An upside breakout will be triggered on a rally above today’s high of 2,334, while a drop below today’s low of 2,291 signals a continuation of the correction. Also, gold could trade tomorrow inside day, which would provide a setup for Wednesday. A rally will be heading up into a potential resistance zone that arguably starts from around 2,354. Also, keep an eye on potential resistance around the 8-Day MA at 2,362 and this week’s high of 2,389.
Long-term Base Breakout in Play
Gold broke out of a multi-year basing pattern recently, which greatly improved its chances to continue to strengthen and trend higher following a correction. The degree and length of the current correction will tell us something about underlying demand. It should not be surprising if it stays strong given the significance of the long-term breakout. Upward momentum really kicked in upon the breakout of a symmetrical triangle on February 29. By March 5 a new record high in gold had been reached.
Drop Below 2,291 Starts a Deeper Retracement
There will likely be a retracement to test support around the orange 50-Day MA at some point during the advance. However, so far, it doesn’t look like it will happen in the current correction. Nonetheless, as noted above, a drop below today’s low of 2,291 could accelerate that scenario. But first there is potential support around the 2,261-price area, which the 38.2% Fibonacci retracement of the bull upswing, beginning from the February 14 swing low.
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7 days ago
Gold Continues to Slump
By: Christopher Lewis | April 23, 2024
• The gold market has drifted lower again in the early hours of Tuesday, as we continue to see the idea of a widening war in the Middle East disappear, at least for now. However, there are other reasons to think that the gold market could find buyers eventually.
Gold Markets Technical Analysis
The gold market fell again during the early hours on Tuesday, as you can see, testing the $2,300 level pretty quickly in the day. That being said, this is a market that I think will end up seeing a move lower, perhaps down to the 50 day EMA. After that, we would have $2,200.
So, with that being said, it does suggest that we’re probably more likely than not to see a little bit of selling pressure. And I think part of this comes down to the fact that the geopolitical concerns have kind of calmed down with even the Iranians saying that the Israelis had received the appropriate response. So, if that’s going to be the case, it does take that piece out of the decision making.
That doesn’t mean the gold will start to fall apart or that the trend is over. What it does mean is we are likely to have an opportunity to buy it at lower pricing. The 50 day EMA, the $2,200 level, I think both would be excellent entry points if we get that. But what I’m going to do is wait for a daily candlestick that ends up forming something like a hammer or signs of an impulsive move to the upside that I would take advantage of the relative strength index is now well within normalcy.
So, I think that’s something to keep in mind as well. We are far from the overbought condition that we had been in, so I will probably stop paying as much attention to that. Either way, I think you do get an opportunity for value play. Hopefully, we will drop another $100 and make it a truly strong opportunity, but we’ll just have to take what the market gives us.
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1 week ago
Gold prices have another 50% upside through 2025 if inflation jumps again, market vet says
By: Business Insider | April 21, 2024
• Gold could soar as high as $3,500 an ounce by the end of next year, market vet Ed Yardeni predicted.
• That implies a nearly 50% upside for gold, if inflation surges to a second peak, Yardeni said.
• Other economists have warned of a second peak in inflation, thanks to price pressures lingering in the economy.
Gold prices could soar through the end of 2025 if inflation stages a comeback, according to market veteran Ed Yardeni.
The Yardeni Research president predicted that gold prices could rise as high as $3,500 by the end of next year, implying as much as a 49% upside for the precious metal from Monday's price around $2,347. That's because inflation could follow the path it did in the 1970s, when prices began to spiral and gold went from $35 an ounce to a peak of $665 an ounce.
"The price of gold is soaring in new high territory," Yardeni said in a note to clients on Sunday, referring to gold prices notching an all-time record in March. "Another wage-price spiral attributable to rising oil prices would be very reminiscent of the Great Inflation of the 1970s, when the price of gold soared. In this scenario, $3,000-$3,500 per ounce would be a realistic target for gold through 2025."
Consumer prices have cooled dramatically from their highs above 9% in 2022, with inflation rising 3.2% in February, but market commentators have warned of a potential resurgence of inflation thanks to supply-chain disruptions stemming from geopolitical conflicts and the strong US labor market.
Inflationary pressures are also being exacerbated by the recent run-up in crude prices, with Brent crude rising past $90 a barrel last week as OPEC+ producers announced they would continue their output cuts.
If conflict in the Middle East escalates, oil prices could rise over $100 a barrel, Yardeni predicted. He estimated there was a 20% chance inflation could rise to a second peak, which would result in the bullish run-up for gold.
Yardeni isn't the only forecaster who sees more upside for gold in the years ahead. Top economist David Rosenberg said he saw 30% upside for gold prices, thanks to the risk stemming from the Fed's expected rate cuts and rising geopolitical conflict.
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DiscoverGold
1 week ago
Gold Fit to Pull Back a Bit
By: Mark Mead Baillie | April 21, 2024
Two missives back we penned “Gold ‘Overbought’ is Great!” and so ’tis been. These past couple of months have finally seen a long overdue repricing of Gold from some three years of being range-bound in the 1700-2000 zone to now up through our forecast high for this year of 2375 and onward to a new All-Time High at 2449 recorded just over a week ago (on 12 April).
And yet whilst championing this latest ascent, we’ve warily pointed throughout the extent to which Gold has become technically stretched such that we “know” retrenchment is to be expected. And we say that with 100% respect due the opening Gold Scoreboard’s Dollar debasement valuation of 3723, given price settling this past week yesterday (Friday) at “only” 2407, itself an All-Time Weekly Closing High. Yet to repeat that from a week ago: “…near-term Gold is very over-extended; but broad-term Gold remains very undervalued…” We can’t quintessentially put it any better than that.
‘Course a key metric we regularly watch as is the case for all five components which comprise the primary BEGOS Markets, (Bond / Euro / Gold / Oil / S&P 500) is Gold’s smooth valuation line which specifies a near-term value based on price’s day-to-day movement relative to the other four BEGOS components. (The website’s Market Values page displays same for all five markets). Indeed invariably through a generation (which for you WestPalmBeachers down there is 25 years) of calculating Market Values, ’tis axiomatic that price and valuation regularly re-meet. And per the following left-hand panel of Gold’s daily closes from three months ago-to-date vis-à-vis the smooth valuation line, price at present (per the difference of price less value) is right now +195 points “too high”. (The right-hand panel is the same drill for the S&P 500, near-term oversold, but upon which we’ll later expound):
Still therein for the yellow metal, the good news is the smooth valuation line itself is rising such that price need not actually drop -195 points; (the pace of the smooth line’s ascent exceeded +5 points every day last week). Regardless: price (2407) remains sufficiently high above value (2212). On a percentage basis that is a +8.8% gap: the last period of such upside percentage excess was during the onset of the RUS/UKR incursion during early March 2022, following which within the ensuing 10 weeks Gold fell better than -200 points. And to the extent Gold’s recent buoyancy is arguably due to fresh Middle East conflict, we’ve herein demonstrated over the years that geo-political price spikes for the yellow metal are short-lived. Further, as the website’s Market Values page is a bona fide leading indicator of direction, even as Gold of late has been getting the bid, again we remain wary of price having reached a near-term lid.
Too from the technical tent, Gold by its “continuous futures contract” is approaching a flip of the daily parabolic measure from Long to Short: currently 2407, were 2386 to trade on Monday, such Short (albeit a bad idea) would be in play; and Gold’s average price decline across the past 12 such Short signals is -353 points (just in case you’re scoring at home). But no, we do not expect anything of such downside magnitude this next time ’round.
‘Course, all this near-term negative awareness may be moot given the International Monetary Fund having stated this past week that “Something will have to give” with respect to what is deemed as an unsustainable level of U.S. debt and thereto its global fallout ramifications. “Got Gold?” Again, despite price’s record highs, fundamentally ’tis still cheap and it looks great:
“And I added a lavendar-bounded support area in there, mmb…“
Nicely done, Squire, in that view of Gold’s weekly bars from a year ago-to-date. And we concur: your 2150-to-2000 area does look structurally-supportive for Gold, and notably enhances the notion that the sub-2000 days are gone. Indeed should near-term price weakness come to the fore, that year-over-year graphic really encompasses Gold’s soar. And ultimately, we’ll see more.
Now having just mentioned the IMF, ’tis a nice segue into the StateSide Economic Barometer. For with respect to the U.S. economy, the IMF also penned on Tuesday: “The exceptional recent performance of the United States is certainly impressive and a major driver of global growth…” We cite as well their chief economist Pierre-Olivier Gourinchas: “The strong recent performance of the United States reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated…” Is that your takeaway per the Econ Baro from a year ago-to-date? Is the economy really that great? Or shall it stagflate as we’ve suggested is its state of late?
Last week brought 13 metrics into the Baro: but period-over-period, just four improved. Moreover, ’tis Q1 Earnings Season: thus far for S&P 500 constituents, 51 have reported with just 30 having increased their bottom lines from a year ago. But this is the mighty “best of the best” S&P 500: should not all entities therein be improving; (a bit tongue-in-cheek perhaps, but to be fair, in a decent Earnings Season at least 70% improvement at the S&P level ought be expected; thus far just 59% have made more money, albeit ’tis early).
However, even as the aforeshown green Market Values graphic of the S&P shows its futures as sufficiently oversold, the truth remains that earnings are not supportive of price: the “live” price earnings ratio of the S&P settled yesterday at 43.1x. Reprise yet again one Jerome B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.” Recall our notion in recent years of a “Look Ma, no earnings!” crash?
Or if you prefer more lately, a “Look Ma, no money!” crash? The current market-capitalization of the “Casino 500” now at $43.3T is just 48% supported by the liquid U.S. money supply (M2 basis) of only $21.0T. So when you sell, how’s your broker’s “I.O.U.” gonna work out for ya? Nuff said.
And yet has enough been said by the Fed? No. For on the heels of former TreasSec Larry “Oh Not That Guy” Summers in the week prior having cautioned the Federal Reserve’s next rate move could possibly be up rather than down, just this past Thursday at the Semafor World Economy Summit, New York FedPrez John “It’s All Good” Williams said: “…if the data are telling us that we would need higher interest rates to achieve our goals, then we would obviously want to do that…” Obviously indeed. You regular readers know we’ve been musing well ahead of the curve about rate hike(s) since our first missive of this year. And ’tis been better than 30 years since upon pushing Barbie’s button she said “Math class is tough.” As we oft harp, these days it seems no one does math; rather, they parrot. “Well, it was on the news, ya know…”
Yet hardly can enough be said about the precious metals having run ahead, both Gold and Silver as thoroughbreds! In fact amongst the entire BEGOS pack, Silver now leads the year-to-date percentage tracks at +19.6%, followed by Oil +16.7% and then closely by Gold +16.2%. (The S&P’s once-inane gain has now fizzled to just +4.1%; we’ll display the whole bunch in next week’s “month-end” edition of the Gold Update).
But specific to Gold below on the left and Silver on the right, historically one is hard-pressed to find such like uptrend performance. Why, even the “Baby Blues” of trend consistency having fallen a month ago below their key +80% axis could not forestall further price-rise by any material degree. Still: that +80% level is critical to watch, for upon being breached, the rule rather than the exception is lower price levels near-term; (the “Baby Blues” you can find updated daily, ‘natch, on the website):
Turning to the 10-day Market Profiles for the precious metals, you also can clearly see the bulk of trading for both Gold (at left) and Silver (at right) as centered in their respective price stacks. The most dominant prices therein traded are as denoted:
Next week bring 10 metrics into the Econ Baro, the two most viewed to be:
• The first peek at Q1 Gross Domestic Product, the growth pace for which is expected to have slowed from that in Q4, and
• March’s “Fed-favoured” Personal Consumption Expenditures Prices, such paces not expected to have eased from those in February.
Nonetheless, despite a pending dip in the price of Gold, ‘tis best you continue to grab more and hold!
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1 week ago
NY Gold Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 20, 2024
The NY Gold Futures has been in an uptrend for the past 2 days closing above the previous session's high. The broader rally has peaked with the last high established at 24488 back on 04/12 5 days ago. Up to now, we have not yet elected any Bearish Reversals from that high. Clearly, this high was formed after a rally of 42 days.
Currently, the market is trading in a neutral position on our indicators but it is trading strongly higher up some 2.35% from the previous session low. Our projected target for closing resistance for the next session stands at 24646, we need to close above that target to imply a further advance. Failure to even exceed this intraday warns that the upward momentum is starting to decline. Nevertheless, this session closed below our ideal projection for closing resistance warning that the market which stood at 24453 is forming a high. A break of this session's low of 23868 will warn that we have a potential temporary high in place.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Gold Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2015. The Last turning point on the ECM cycle high to line up with this market was 2020 and 2011 and 1996.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NY Gold Futures has continued to make new historical highs over the course of the rally from 2015 moving into 2024. However, this last portion of the rally has taken place over 9 years from the last important low formed during 2015. Clearly, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Looking at the indicating ranges on the Daily level in the NY Gold Futures, this market remains moderately bullish currently with underlying support beginning at 23792 and overhead resistance forming above at 24148. The market is trading closer to the resistance level at this time. An opening above this level in the next session will imply that a bounce is unfolding.
On the weekly level, the last important high was established the week of April 8th at 24488, which was up 8 weeks from the low made back during the week of February 12th. Afterwards, the market bounced for 8 weeks reaching a high during the week of April 8th at 23217. Since that high, we have been generally trading down to sideways for the past week, which has been a sharp move of 4.434% in a reactionary type decline. Nonetheless, the market still has not penetrated that previous low of 19964 as it has fallen back reaching only 23402 which still remains 17.22% above the former low.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 24488 made 1 week ago. Still, this market is within our trading envelope which spans between 16752 and 26568. The broader perspective, this current rally into the week of April 8th has exceeded the previous high of 20832 made back during the week of January 29th. This immediate decline has thus far held the previous low formed at 19964 made the week of February 12th. Only a break of that low would signal a technical reversal of fortune and of course we must watch the Bearish Reversals.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend, and cyclical strength. From a pointed viewpoint, this market has been trading down for the past week.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2020 while the last low formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2023 and thus we have a divergence warning that this market is starting to run out of strength on the upside.
Interestingly, the NY Gold Futures has been in a bullish phase for the past 16 months since the low established back in November 2022.
Critical support still underlies this market at 19860 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading above last month's high showing some strength.
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1 week ago
Gold’s Remarkable Breakout
By: Gold’s Remarkable Breakout | April 19, 2024
Gold’s powerful breakout in recent months has proven remarkable. But the reason isn’t its fast vertical surge to impressive record heights. This breakout rally is exceptional because gold’s usual drivers aren’t fueling it. Big demand outside of normal channels is catapulting gold deeper into uncharted territory, which is really bullish. That’s preserving capital firepower for buying from gold’s regular speculators and investors.
In the quarter-century I’ve been actively trading gold stocks and writing contrarian newsletters, my focus has always been what’s moving markets and why. That key causal chain from underlying drivers to price action is essential to study and understand, leading to more-profitable trading. Knowing the why markets move leads to superior timing on the when of actually buying low and selling high, increasing trading success.
Every major gold upleg during the past couple decades was fueled by combinations of three sequential stages of buying from specific groups of traders. The first is speculators covering gold-futures shorts, the second is specs buying gold-futures longs, and the third is investors returning to chase gold’s resulting upside momentum as evident in major-gold-ETF holdings. But that model isn’t fully explaining today’s upleg!
Initially it played out according to script. Gold bottomed at $1,820 in early October after a gold-futures-shorting-driven violent breakdown. The very next morning I published an essay concluding “Their shorts in particular are likely challenging major secular highs, which are never sustainable for long. That guarantees huge mean-reversion short-covering buying is imminent, which will catapult gold sharply higher.”
That indeed came to pass, with gold surging 13.8% into early December to $2,071. That proved its first nominal record close in fully 3.3 years, likely to soon fuel frenzied momentum-chasing buying. Normal speculator stage-one and stage-two gold-futures buying drove that, which was massive during that span. Only released weekly, speculators’ aggregate gold-futures positioning data is current to Tuesday closes.
Over the eight Commitments of Traders weeks best matching gold’s initial surge, specs bought to cover 65.0k short contracts and added another 71.5k long ones. That’s equivalent to 424.6 metric tons of gold buying, a massive amount in a couple months! That averaged 17.1k contracts of spec buying per CoT week, which is very large. Specs’ perfectly-normal early-gold-upleg gold-futures buying is evident in this chart.
Gold’s sharp mean-reversion higher out of that oversold and unsustainable early-October low resulted from big spec gold-futures buying. Note that major reversal was first triggered then initially driven by huge stage-one short covering, the red spec-shorts line plunged! That propelled gold high enough for long enough to attract in stage-two long buyers, which is evident in the green spec-longs line soon surging too.
That was all totally normal, the same short-covering-then-long-buying dynamic that fuels most major gold uplegs. But just as gold was finally reclaiming record territory, that spec gold-futures buying was depleting. As this chart illustrates, both spec shorts and longs have secular trading ranges. The lower support zone for the former is around 95k contracts, while the upper resistance zone for the latter is near 415k.
Generally buying peters out around those levels, indicating speculators’ gold-futures buying firepower has been largely exhausted. There aren’t many traders willing to bear the extreme risks inherent in hyper-leveraged gold-futures trading, and the capital they control is relatively small in the grand scheme. So when this gold upleg was born, the distances between current positioning and these zones revealed likely buying.
Back in early October, speculators had probable room to buy to cover 79.4k shorts and add 150.2k longs before hitting 95k and 415k respectively. That added up to 229.6k or 714.0t. But by early December, all that buying had expended much of that upleg’s potential, with specs only having another 14.4k shorts and 78.7k longs left. That was 93.1k contracts or 289.4t, just 4/10ths of that initial buying firepower remaining...
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DiscoverGold
1 week ago
Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 20, 2024
• Following futures positions of non-commercials are as of April 16, 2024.
Gold: Currently net long 201.9k, down 496.
Last Friday, gold printed a new intraday high of $2,449 but only to then reverse hard to close the session at $2,361. This behavior showed up after a vicious rally. Last October, the metal bottomed at $1,824 and tagged $2,047 as recently as March 1st. The Friday action could have set in motion a process of unwinding at least some of the overbought condition gold is in.
This week, gold did drop intraday Monday to $2,340 and that was it; the drop to the 10-day was bought, with the remaining four sessions just about trending higher all along the sharply-ascending average, ending the week up 2.2 percent to $2,414/ounce.
Non-commercials are in a wait-and-see mode, with net longs just north of 200,000 contracts in five of the last six weeks. They probably will start worrying if gold loses near-term support at $2,240s and most definitely if breakout retest at $2,080s fails. The yellow metal broke out of $2,080s early March.
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DiscoverGold
2 weeks ago
Gold Uptrend Faces Challenges
By: Bruce Powers | April 19, 2024
• Gold will complete the week with an inside weak, thereby setting price levels to signal either a move up or down next week.
Gold remains strong and in a clear uptrend, yet risks remain. It has been advancing in a rising consolidation pattern along support of the 8-Day MA since the pullback low on April 10. Bullish momentum has declined during this phase and gold has struggled to sustain a rally. It hit a five-day high of 2,418 today but is on track to close weak, in the lower half of the day’s range, at the time of this writing.
Fibonacci Confluence Zone Keeps Advance at Bay
Last week’s new record high of 2,431 found resistance at the top of an identified range of Fibonacci confluence, where targets of multiple measures line up. Given the subsequent bearish reaction on the same day it looks like the market recognized the resistance zone. The close was in the lower quarter of the day’s range following a new record high. That is not bullish behavior. Nevertheless, interest from buyers has remained strong as gold struggles this week to recapture that high. It has been unsuccessful so far.
Inside Week Sets the Stage
This week will end as an inside week, which is a form of consolidation on that time scale. Therefore, heading into next week a bullish signal would be indicated on a rise above this week’s high 2,418. If upward momentum is then sustained the record high will likely be challenged and possibly exceeded. The next upside target would be the 161.8% Fibonacci extension of the retracement of the large downswing starting from the August 2011 swing high at 2,457.
A 100% retracement completed at that high of 1,921 in July 2020. Further, a measured move completes at 2,480. Each measured move is marked with rising purple arrows on the chart. Since they cover a large time frame the 2,480 target has a good chance of eventually being reached and encountering resistance around that target.
Breakdown Leads to Pullback or Further Consolidation
On the downside, a bearish breakdown signals a drop below this week’s low of 2,324. The 8-Day line will be broken on a move below 2,368 and may provide a warning signal. Support may first be seen around the 20-Day MA, currently at 2,301, while the 50% retracement is nearby at 2,289. Rather than retracing it is also possible gold continues to consolidate near highs as it further prepares for a bullish continuation.
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DiscoverGold
2 weeks ago
Gold Market Likely to Work Off Froth
By: Christopher Lewis | April 17, 2024
• The gold markets have gotten too far ahead of itself, and it now looks like we are going to do something about it. Ultimately, this is a bullish market, but it needs to take a break.
Gold Markets Technical Analysis
The gold market on Wednesday was rather quiet as we continued to hang around the $2,400 level, suggesting that perhaps, maybe we have some work to do to continue the upward momentum. After all, gold markets have been on fire recently, and therefore it’s not overly surprising to think that perhaps we are overbought.
The 50 day EMA is reaching the $2,200 level, and therefore, I think you have a situation where the market may come back a bit, but certainly there are plenty of buyers underneath. There are geopolitical tensions out there galore that could make gold attractive. And at the same time, we have central banks out there willing to buy it.
So, with all of that being said, it does make a lot of sense that we could go higher. That being said, gold desperately needs to either go sideways for a while or pull back. The RSI is currently above 70 and that, of course, is an overbought condition as well. So, all things being equal, we either will work off this excess via a pullback perhaps to the $2,200 level, or we may just simply use time to work off the excess as we go sideways.
I don’t like chasing the market all the way up here, as this is a major move, and it makes sense that we would see a lot of volatility in the market over the short term. The market is still bullish, but at this point, I think you have to assume that chasing is going to be a major problem if you attempt to do so.
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DiscoverGold
2 weeks ago
Gold Buyers Remain in Control
By: Bruce Powers | April 16, 2024
• Gold's recent bounce off support and completion of a Fibonacci retracement indicate potential for higher prices, but a daily close above last week's high is needed for confirmation.
Following last week’s record high of 2,431 in gold, it has been testing support around the 8-Day MA, now at 2,354. Yesterday, it bounced off a low of 2,324 thereby successfully completing a 38.2% Fibonacci retracement. Also, support has been seen above the two top channel trendlines that cross around April 4 rather than trading below it.
Bounces off 38.2% Fibonacci Support
The subsequent intraday advance bodes well for higher prices. However, it remains to be seen whether that will happen before or after a deeper retracement. Generally, in Fibonacci ratio analysis, the 38.2% retracement is watched as a minimum pullback before the primary trend may exert itself. Since that has been accomplished, a bullish continuation is possible.
Risk of Deeper Pullback Remains
Nonetheless, a daily close above last week’s high is needed to confirm a bullish trend continuation. Until then, another pullback remains possible. A drop below Monday’s low will be a sign of weakness that could lead to a deeper pullback. If hit, gold would then also be clearly below the 20-Day line, a further sign of weakness.
If the 8-Day line is busted, then the 20-Day MA at 2,271 becomes a target. Further, the 50% retracement is slightly above there at 2,289. A little lower is the 61.8% Fibonacci retracement level at 2,255. Support could be seen near any of those price levels. The more significant potential support zone is down near the 50-Day MA at 2,153 and the prior record high of 2,135 from early-December.
Evidence to Suggest at Least a Temporary Top Was Reached
In addition to the Fibonacci confluence zone (more than two Fibonacci levels) seen near the current record high, there is also both time and price symmetry that points to a possible high. Once there is a match with the current advance relative to a prior swing, the chance for a reversal increases.
There have been two legs up off the swing low bottom in October of last year. The first leg up hit a top in 41 trading days. Last Friday’s high was 41 trading days from the start of the second leg up on February 14. Price symmetry is not as close of a match as the first leg up advanced by 17.9% and the second rallied by 22.5%.
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DiscoverGold
2 weeks ago
Gold Forecast: Cycles Move Into Topping Range
By: Jim Curry | April 14, 2024
From my last article posted in late-March, Gold was in the midst of a larger uptrend, which was expected to hold up into the early-to-mid April timeframe. With that, we are now in the range for a correction for the yellow metal, though one favored to end up as a countertrend affair - against a much bigger upward phase.
Gold's 72-Day Cycle
The last key bottom for Gold came from our 72-day time cycle, which is currently the most dominant cycle for this market - and which bottomed out back in mid-February. From that low, we projected (in advance) a 10-14% rally to play out into April, which has easily been met.
Here again is that 72-day cycle:
In terms of time, the average rally phases with this 72-day wave were noted as having taken 39 trading days before topping, which favored higher highs into April 9th or later. With that, the highest high seen was Friday's (April 12th) peak of 2448.80, which puts us into the expected topping range with this cycle.
As mentioned in my last article, once this 72-day wave turns, a decent correction should be expected to unfold. The downside 'risk' to that correction looks to be at or near our 72-day moving average and/or the lower 72-day cycle band, each shown on the chart that tracks this wave.
Technicals Point to Potential Peak
With the above said and noted, there is at least the potential for Friday's spike up to the 2448.80 figure (June, 2024 contract) to end up as the expected high for our 72-day cycle. This is due to the position of certain technical indications that we track, with the most noteworthy being our Gold Timing Index, shown on the next chart:
With the most recent spike to higher highs for Gold, of note is that our Gold Timing Index (in dark blue) managed to register a minor divergence, which is key - and is something we would expect to see near a peak of 72-day degree (or higher). This is particularly true, when price is trading above the upper 72-day cycle band (in magenta).
Adding to the notes above, in the lowest pane (red) we have our new Gold cycle indicator, which last dropped below its lower (buy signal) reference line at the March 25th close of 2198.20. That signal remained in place until April 5th, with the indicator moving back above its upper reference line - and closing that day at the 2345.40 figure.
With the most recent action, our Gold Cycle indicator is currently dropping, and could move back below its lower reference line in the coming days - thus setting up the next short-term bottom for the metal.
All said, we have a potential peak in place with our 72-day time cycle, though this has yet to actually be confirmed. This would require a push below a key price 'reversal point' that tracks this wave - with the exact details noted in our Gold Wave Trader market report.
Gold's Bigger Picture
For the bigger picture, a correction phase with our 72-day wave - if seen going forward - is anticipated to end up as countertrend, holding well above the mid-February low of 2018.20, the prior 72-day trough.
Support to the coming 72-day cycle downward phase would be at or near the aforementioned 72-day moving average, and/or lower 72-day cycle band - both well below current prices. If correct, we would expect a push back to higher highs - in another rally of some 10-14% or more - playing out into the Summer of this year. That rally would be the technical setup for the next mid-term peak in Gold, coming from a larger 310-day cycle - which we will take a look at again in a future article.
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2 weeks ago
Gold Market Update - it's CORRECTION TIME...
By: Clive Maund | April 14, 2024
The turnaround in gold and the Precious Metals sector on Friday was really dramatic with gold dropping about $80 from its 11 am EDT peak and this brought out the old explanation about “the powers that be” cratering it by burying it with paper shorts. However, as we will see there may be a simpler explanation.
Gold had risen a lot by last Friday to become extremely overbought and it appears that a part of this rise was due to the fear factor relating to Iran attacking Israel and starting World War 3. This has set gold up for a “sell on the news event” where it drops when Iran actually does attack Israel, especially if, as seems to be the case at the time of writing, Iran simply lobs some fireworks at Israel so that “honor is satisfied” with most of these drones or missiles being shot down and those that arrive do little damage. While hostilities may continue at a low key level it appears that Iran is behaving with some restraint in order to avoid inciting intervention by the US which is Israel’s giant henchman.
To answer the question where gold and the PM sector generally is headed we are probably better using the language of the market itself and seeing what the charts have to say.
The prediction in the last Gold Market update posted on March 16th turned out to be correct as the following chart from that update shows, even if it took a little longer to get moving than expected…
So we will now look at gold’s latest 3-month chart to see what happened, and more importantly what it portends for the future. Before going any further it should be pointed out that because the last prediction was correct, it doesn’t mean that today’s will be.
As we can see, after the last update was posted gold did indeed break out upside from its bull Flag to enter a strong uptrend that took it up to approach $2450 early Friday at which point it had become extremely overbought – only once in the past 10 years has it gotten more overbought, and that was only by a small margin. It has been super-critically overbought on its RSI indicator pretty much all this month so far which itself is a warning, with a much more dire warning appearing on Friday with the dramatic high volume intraday reversal candle that can be described as a gravestone doji / spinning top, both of which are bearish in this position and indicate a reversal. This suggests that Smart Money had figured out that Iran’s attack on Israel would be a “nothingburger” so they took profits. Another reason for gold to consolidate or correct back here is the huge gap that that the price has opened up with the 200-day moving average which is a measure of how overbought it is. If gold does react back how much might it drop? – probably not much given the other much more serious bullish factors in play that aren’t going anywhere. It is thought unlikely that it will correct back further than about $2250 and it shouldn’t drop as far as the preceding Flag.
So what about PM stocks? They also put in bearish candles on Friday with the proxy ETF, GDX putting in a prominent “bearish engulfing pattern” on its chart on Friday as we can see on its 3-month chart below. This indicates a reversal, especially as it occurred on high volume – the biggest for 2 years.
Interestingly, copper also put in a bearish looking candle on quite high volume on Friday, a so-called “gravestone doji” which is where the open and close are close together near to the bottom of the day’s range…
The dollar, meanwhile, has done well on the fear trade, breaking strongly higher above resistance on Wednesday and following through with another big gain on Friday and while it is getting short-term overbought and so might consolidate or react back some, at this point it looks like it wants to go higher still. Some folks on Friday morning thought that we had entered a nirvana where the dollar and gold would rally strongly in tandem, but alas that proved to be false.
So this is thought to be a good time to scale back positions somewhat in the PM sector, with a view to buying back at better prices on a reaction or taking the opportunity to rebalance portfolios to include the strongest stocks in the sector. Where you have big gains in some stocks it might work out well to say take profits on half, then buy back after a reaction or consolidation or reposition into better stocks.
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2 weeks ago
NY Gold Futures »» Weekly Summary Analysis
By: Marty Armstrong | April 13, 2024
This market made a new high today after the past 2 trading days. The market opened higher and closed higher. The immediate trading pattern in this market has exceeded the previous session's high intraday reaching 24488. Therefore, this market has rallied over the past 42 trading sessions. Nevertheless, this market remains well above all seven of our intial support levels. Meanwhile, this market's closing at this time has been the highest during this 42 day rally. This certainly warns that we can still see higher highs ahead from here. It will take a closing below 23506 to signal a decline is unfolding. This market is trading above our normal trading envelope which resides at 23549 suggesting it is strong and still in a breakout position. Moreover, this market is quite strong for now trading above all 8 technical support levels. Additionally, this market is very strong while our projected overhead resistance stands at 24687 and 24813.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Gold Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2015. The Last turning point on the ECM cycle high to line up with this market was 2020 and 2011 and 1996.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NY Gold Futures has continued to make new historical highs over the course of the rally from 2015 moving into 2024. However, this last portion of the rally has taken place over 9 years from the last important low formed during 2015. Noticeably, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the NY Gold Futures, this market remains moderately bullish currently with underlying support beginning at 23557 and overhead resistance forming above at 23845. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of April 8th at 24488, which was up 8 weeks from the low made back during the week of February 12th. So far, this week is trading within last week's range of 24488 to 23217. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 24488 made 0 week ago. This market has made a new historical high this past week reaching 24488. Here the market is trading weak gravitating more toward support than resistance. We have technical support lying at 23792 which we are currently trading below implying the market is very weak. This infers that this level will now be resistance. Our Major Channel Support lies at 21446 and a break of that level would be a bearish indication for this market.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 3 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2020 while the last low formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2023 and thus we have a divergence warning that this market is starting to run out of strength on the upside.
Interestingly, the NY Gold Futures has been in a bullish phase for the past 16 months since the low established back in November 2022.
Critical support still underlies this market at 19860 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading above last month's high showing some strength.
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