Graceland Updates 4am-7am
Jan 31, 2017
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As I have noted for many years, gold has a rough general tendency to decline ahead of the US jobs report, and then rally in the hours and/or days following the release of the report.
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The next monthly jobs report will be released at 8:30AM on Friday. This report and the closure of the Chinese gold market for the New Year's holiday should be quite negative for gold, but...
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The sell-off from the $1220 area is orderly, and gold feels firm.
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Please click here. Double-click to enlarge. Gold did break down from a small double top pattern.
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The price target of the pattern is $1170, but there may be an uptrend channel forming. I've highlighted that in blue.
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Also, the lead line of the 14,7,7 Stochastics series oscillator that I use exclusively on daily bar and candlestick charts is now sitting at about 50, where momentum-based rallies can occur.
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With China offline and the jobs report dead ahead, why is gold acting so firmly? Well, please click here now. Double-click to enlarge. The US dollar looks very weak on this daily bars chart against the Swiss Franc.
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It's broken down from a head and shoulders top pattern, and has not rallied since arriving at technical support yesterday.
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The rally could still happen, and that would likely push gold down to $1170 ahead of the jobs report.
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Given that gold has rallied from $1125 to $1220, a decline to $1170 is perfectly normal. An orderly decline like this should not make gold investors nervous.
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Please click here. Double-click to enlarge this dollar versus yen chart.
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All gold community eyes should be focused on the 112.50 price level. A breakdown below that level would almost certainly usher in a gold price rally to my $1250 target zone.
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The Swiss franc, the Japanese yen, and gold bullion are all viewed as key "risk off" assets by bank FOREX traders.
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It's clear that the dollar is struggling now against both the franc and the yen.
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Please click here. Double-click to enlarge this weekly bars euro versus the dollar chart.
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The euro never rallied against the dollar in 2016 in the way that the franc, yen, and gold did.
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That's partly because Europe's economic recovery has been more anemic than America's, but mainly because euro is not viewed as a safe haven currency by the large bank traders.
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Having said that, most gold price discovery takes place in US dollars, and a rally in the euro could add some zest to the gold price!
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The recovery taking place in Europe now could be enough to reverse the ECB's policies of QE and low interest rates.
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That would create both European inflation and a euro rally.
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Please click here. Double-click to enlarge this daily bars GDX chart.
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Gold stocks are performing exceptionally well since gold ran into resistance at my $1220 target zone.
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Can GDX rally to $25 if gold falls to $1170? I think that's asking a bit much (for now), but GDX should easily rally to $25 if gold can climb back to $1220.
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A rally to $1250 would likely see GDX surge to $28, and a bigger move to $1650 for gold should see GDX make a new all-time high. That's a bit further down the road, but eager gold stock investors should ensure they are building a solid block of core positions now, to partake in all the upside fun!
Thanks!
Cheers
St
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