Gold Spotprice Analysis

Gold in USD (one ounce = US$1.255,70)

• Last monday Gold reached a new alltimehigh around US$1.265. The same day just a couple of hours later the price plunged US$35. It reached a bottom around US$1.225 last wednesday. From here it went straight up again to close last friday at US$1.255. Finally a week without change. The rising triangle has not yet been broken but the lower trendline was successful tested for support.

• These volatile last trading days created a so called Doji candlestick pattern on the weekly chart. Opening and closing price are very close. A Doji represents a market in which bulls and bears are balanced. In an uptrend it can be a sign of a trend reversal since the bulls have lost control of the market, although it doesn´t mean that the bears are already in charge. A doji is a sign of indecision, uncertainty and change of mood .

• Technically this is a clear warning sign. As well the sideways moving Bollinger Bands (upper band at US$1.257,50) are getting closer together. On top the rising wedge on the weekly chart. This indicates a big move to come.

• On the positive side we find the parallel increasing 50d-MovingAverage (US$1.204,75) and the 200d Moving Average (US$1.125,25) as well as the uptrend since the lows in mid of may around US$ 1.165. The RSI-Indicator on the daily chart is not overbought and has generally much more room to go up.

• All in all a mixed shortterm picture which favors a bigger correction soon to come. If gold does not manage to break out above US$1.265 quickly a set back down to at least US$1.170 to US$1.190 should follow.

• The medium- and longterm picture is still very bullish. My next price target is the Fibonacchi - Extension (261,8% of the last big correction) at US$1.600. This might be possible until end of this year or spring 2011.

• The DowJones/Gold Ratio is currently at 8.08 and seems to be on the way back to the lows from spring 2009 around 6,86.

• Long term I expect the price of gold moving towards parity to the Dow Jones (=1:1). The next primary cyclical change is still years away. This means we are still in a long term bull market in gold (and also commodities) and in a secular bear market in stocks.

• This chart gives you a good idea about the big picture we are in and shows the huge potential for precious metals in the future.

Gold in EUR (one ounce = 1015€)

• €-Gold did not move at all during last week. But we can find lots of negative divergences in various indicators as well as the huge gap with the 50d-MA (959€) and especially the 200d-MA (817€). The new alltime high in early june was not confirmed by RSI and MACD. Normally these kind of parabolic moves (200€ in less than 2 months) will be corrected via time and price.

• In the current worldwide currency crisis everything is possible of course but I would not buy at these lofty price levels. Instead it´s time to patiently wait and hope for lower prices during summer.

Goldbugs Index USD (492,93 points)

• The Goldminingindex HUI did not change during last week and is still moving in a big sideways pattern between 375 and 500 points.

• In contrast to the general market the HUI could hold quite well during last week´s selloff in Dow, S&P etc.... Now we have to see if the goldminers manage to breakout to the upside or if the strong resistance around 500 points forces another selloff.

• The upper Bollinger Band (493,89) clearly limits higher prices at the moment. A move down below 480 points could trigger a fast correction.

• To summarize there is no reason to buy goldstocks at current levels. Instead you should make sure that you have tight stopps in place since the sector is famous for its nasty and heavy selloffs.

Gold COT Data

• The commercials increased their short position for another 10.000 contracts and approaching levels last seen in december 2009 before gold reacted heavily. This is a clear warning signal.

04/18/2009 = -153.419 ( PoG Low of the day = US$885 )
12/01/2009 = -308.231 ( PoG Low of the day = US$1.190 )
05/11/2009 = -282.644 ( PoG Low of the day = US$1.201 )
06/15/2009 = -278.944 ( PoG Low of the day = US$1.220 )
06/22/2009 = -288.916 ( PoG Low of the day = US$1.232 )

Gold Seasonality

• Gold has a strong seasonality. During june, july and august the price normally moves down or sideways while september is one of the strongest month in the year. Therefore we should not be suprised by a typically shakeout of the weak hands during summer.

Gold Sentiment

Gold is not a contrarian investment anymore. This makes the sentiment analysis more complex and difficult. But last week a very big german newspaper "Die Süddeutsche" dedicated its famous page 3 to gold. This reflect a high level of optimism and is usually a contrarian signal.

Conclusion

• In the medium term Gold should be on the way to my next price target around US$1.600. But right before those big moves there has always been a nasty setback in july and/or august to shake out the weak hands.
• I am expecting a decision in favor of the bears already next week and the start of a typical summer correction. This would be confirmed with a daily close below US1.240.