• 747 days Will The ECB Continue To Hike Rates?
  • 748 days Forbes: Aramco Remains Largest Company In The Middle East
  • 749 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,149 days Could Crypto Overtake Traditional Investment?
  • 1,154 days Americans Still Quitting Jobs At Record Pace
  • 1,156 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,159 days Is The Dollar Too Strong?
  • 1,159 days Big Tech Disappoints Investors on Earnings Calls
  • 1,160 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,162 days China Is Quietly Trying To Distance Itself From Russia
  • 1,162 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,166 days Crypto Investors Won Big In 2021
  • 1,166 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,167 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,169 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,170 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,173 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,174 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,174 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,176 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

  1. Home
  2. Markets
  3. Other

Gold Market Update

While a significant short-term rally looks probable, the intermediate outlook remains bearish, because of the breakdown in the commodity complex and the outlook for the dollar, which we will examine in this report.

On the 5-year gold chart we can see that it remains oversold as shown by the oscillators at the top and bottom of the chart, and it is on important support that should generate a rally. A 300-day moving average has been appended to this chart instead of the usual 200-day, for as we can see, gold has found support in the vicinity of this average throughout its 5-year bull market, and proceeded to advance again. This time it is different however, for although it reasonable to expect a rally here, especially given the strong support in this zone, we shouldn't ordinarily expect the rally to get too far. This is because gold has been in retreat from a spike top that occurred in May, and because commodities generally have broken down from their long-term uptrend. The word "ordinarily" is used in the last sentence with good reason, for even as you read this, US naval forces are steaming in the general direction of Iran, and if the Neocons do launch an attack on this country soon, as is quite possible, you are going to quickly wish to be long gold and oil, along with a lot of other people who will suddenly have the same idea.

So, as traders, how do we handle this situation? Fortunately, due to the proximity of close support, a clear and effective strategy can be implemented. Gold may be bought anywhere between the current price and the lower limit of the strong support at $530, but exited immediately on a break below $530. It is considered unlikely that it will drop significantly now before a rally gets underway. This strategy enables the buyer to capitalize on a short-term rally, that is likely to take the price to the $610 area, but also be in position to capitalize on a windfall rally in the event of an attack on Iran. The dollar has had a good run in recent days that has led to it being overbought at an important resistance level. This is another factor pointing to a short-term advance in gold.

Over a longer timeframe we should keep in mind the bearish implications of the commodity breakdown shown on the 5-year CRB commodities index chart shown below.

Another worrying development for those long Precious Metals is the appearance of a giant potential Head-and-Shoulders bottom on the US dollar chart. It is not yet complete, therefore it is not conclusive, but nevertheless it would unwise not to keep this in mind. Most everyone is bearish on the dollar, which is in itself bullish. Who knows, maybe the Neocons will realize their dream of taking over the world, and then you will trade in dollars at the point of a gun.

 

Back to homepage

Leave a comment

Leave a comment