Gold Spot Price Analysis

Gold in USD (one ounce = US$1.211,40)

• During the last two weeks Gold corrected nearly US$80 or 6,3%. The lows came in around US$1.185 last Wednesday. Gold found short term support exactly at the trendline.

• Since thursday we are witnessing a move back above US$1.200 which could extend further to a maximum of US$1.235. Normally prices fluctuate around the 50-dMA (US$1.216,55) for some time before a decision is being made. The important short term Fibonacchi Retracements are at US$1.215,81 (38,2%) and US$1.234,60 (61,8%). Gold should recover to one of these two price targets.

• If instead the resistance at US$1.215 can not be taken out quickly we have to be very careful. Especially the weekly chart indicates a continuation of the correction. The rising wedge has not yet been broken but the divergences in MACD and RSI as well as the big gap down to the 200-dMA (US$1.134,55) are not looking good. The lower weekly Bollinger Band (US$1.077,50) gives a lot of room for an extended correction.

• The medium- and long term 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 Dow Jones/Gold Ratio is currently at 8.42 points.

• 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.

Gold in EUR (one ounce = 958€)

• The correction during the last two weeks hit the price of EUR-Gold even stronger. Since the highs in early june EUR-Gold corrected nearly 10,6%.

• There are still a lot of negative divergences in MACD and RSI as well as very huge gap down to the 200-dMA (830€). Especially the weekly chart indicates more need for consolidation and correction. Short term prices in EUR could recover back to the 50-dMA (979€).

• Overall this summer correction could force Gold in EUR down to around 850€ within the next weeks and months.

Goldbugs Index USD (462,59 points)

• The Goldmining Index HUI lost nearly 13,4% and proved again to be extremely volatile. But so far the trendline is support.

• The Index should not fall below 445 points anymore otherwise we will have a big sell signal.

• All in all a kind of unclear picture. I stick to my view that there is no reason to buy gold stocks right now.

Gold COT Data

• The Commercials reduced their shorts by nearly 40.000 contracts but those numbers are still far away from a position that would be equally to important lows in the past.

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 )
05/11/2010 = -282.644 ( PoG Low of the day = US$1.201 )
06/15/2010 = -278.944 ( PoG Low of the day = US$1.220 )
06/22/2010 = -288.916 ( PoG Low of the day = US$1.232 )
06/29/2010 = -289.956 ( PoG Low of the day = US$1.231 )
07/06/2010 = -249.142 ( PoG Low of the day = US$1.191 )

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.

Gold Sentiment

Still 79% of the advisers are bullish on gold. As well I have the impression that there is a lot of new and inexperienced money in the gold market now. The sentiment has to cool down before a sustainable bottom can be found.

Conclusion

• In the medium and long term 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.

• Short term Gold could recover up to US$1.215 or even US$1.235. From here the bears should attack again and force prices down to US$ 1.140-US$1.165 within the coming weeks and months.

• In case of a renewed deflationary collapse I would not be sup rise to see Gold moving down to under US$1.000. This of course would be a great buying opportunity.

• Any move above US$1.240 neglects the negative technical picture.