Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

GOLD Analysis and Trading Strategy for August 2009

Commodities / Gold & Silver 2009 Aug 11, 2009 - 01:21 AM GMT

By: Florian_Grummes

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleIt’s really getting interesting in the goldmarket. The big question is: “Will Gold break through the US$1000 level and advanced to new alltime highs or will it once again fail while trying ? To be honest: I am still quite sceptic at the moment. I expect another sell off, before Gold can run to new highs, but let’s have look at the charts first.


Gold Daily Chart

Gold spot price

Gold Weekly Chart

Weekly gold spot price

Three weeks ago Gold could not conquer the US$950-957 level. After a few unsuccessful attempts a quick sell off pushed the price down to US$925. But from here Gold showed incredible strength again and within just a few days it went up to even US$970. This last Friday then Gold dropped after a volatile session down to US$954 with nearly no changes compared to the week before. Although it is still summer the volatility was rising strongly last week. It seems something will happen soon.

The technical picture still looks very positive. Gold is building up more and more pressure to break out of the triangle & through US$ 1.000. The rising 50d MA (US$943,26) and the 200d MA are moving up parallel. All trendlines are in place and in the last month every pull back was bought immediatley.

Unfortunately the little double top at US$ 970 (Tuesday & Thursday last week) as well as the big distance to the rising 200d MA (US$887,35) reminding us to stay alert. Also the upper Bollinger Band (US$971,55) is the next resistance. And most important the intraday-reversal in the Dollar on Friday could be the start of a suprising Dollar Rally.

So far the correction since the all time high in March 2008 (US$1.037) is still in play. To end the correction a sustainable move above of the US$1.000 level is necessary.

Shortterm another attempt up to US$970-990 seems possible. But for that an immediate renewed dollar weakness will be necessary. If the August monthly close is above US$960 it is highly likely that we see the breakout to new alltime highs very soon.

On the other hand Gold should not fall below US$944 anymore otherwise we shall witness another sell off down to the at least the US$920-900 level.

The long term technical & fundamental perspective for gold is still super bullish. The next price targets are the Fibonacci‐Extensions of the complete correction since March 2008 at US$1.250 and U$1.600.

The DowJones/Gold ratio is now at 9.80. The world wide stock market rally should have reached its final stadium. At the end of August or the beginning of September the bears will be back. In 2001 the DAX recovered within 6 month from 3.539 up to 5.467 points and then dropped down to 2.188 points within the next 12 months! We have witnessed very similar price action during this spring & summer so far….

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

Gold in EUR (one ounce = 672,47€)

Gold in Euro – Daily Chart

Gold in euros dollars

Gold in Euro – Weekly Chart

Euro gold spot price

As well in EUR Gold is moving slowly but surely higher.

The rising 200d MA (662€) has been tested twice in July and is still an important support. If that support fails we will see much lower prices. But from a technical perspective this is pretty unlikely at the moment.

Instead after getting back above the falling 50d MA (670€) Gold should reach the 700€ level soon. Both Bollinger Bands were contracting during July down to a range of less than 18€ which indicates that now a bullish breakout is next.

As an EUR Investor the price of gold calculated in EUR is far more important for you than in US$. Don´t fool yourself. From a longerterm perspective Gold is still a very good buy at or below 675€ an ounce.

Gold COT Data

Gold cot Data Trading

The commercial shortposition is again at frightening highs! This was neither 2005 nor 2007 the case before the big rallies in the goldmarket started. The commercials are more contracts short than at the end of February 2009. At that time Gold dropped from US$990 down to US$863.

Of course one can argue that the Commercials are short since 2001 and from that perspective they were not „right“ the last eight years. But they always build up their position in rising prices and they covered them not before a dramatic panic driven selloff. And they surely earned a lot of money by doing so.

I still believe that a new rally in the price of gold can only start, if the commercials reduce their short positions to below 100.000 contracts. Below 900US$ the Commercials should cover more of their positions. If we see a last sell off down to US$880-845 to get rid off the the weak hands the COT data should look very positive again.

18.04.2009 = -153.419  ( PoG Low of the day = US$ 885 ) 19.05.2009 = -183.065  ( PoG Low of the day = US$ 920 ) 26.05.2009 = -208.136  ( PoG Low of the day = US$ 939 ) 02.06.2009 = -226.521  ( PoG Low of the day = US$ 970 ) 23.06.2009 = -194.430  ( PoG Low of the day = US$ 913 ) 14.07.2009 = -182.287  ( PoG Low of the day = US$ 917 ) 21.07.2009 = -204.226  ( PoG Low of the day = US$ 944 ) 28.07.2009 = -202.521  ( PoG Low of the day = US$ 934 ) 04.08.2009 = -228.193 (PoG Low of the day = US$ 950 )

Gold Seasonality

August is a Pivot month. Normally this month brings the decision about what’s going in the market for the next 6 to 9 months. Normally starting around August the price of gold rallies until the next spring. Therefore the seasonality perspective supports higher prices in the weeks & months ahead.  

Gold Sentiment

Most of the time big rallies and new bull markets are born in a panic sentiment after a strong sell-off (e.g. DOW in March). At the moment most of the market commentators and the „gurus“ expect the breakout very soon. To me the sentiment feels way too positive and I am not planning to be moving with the crowd.

Gold mining stocks analysis

Goldbugs Index USD (366,27 Points) - Daily Chart

Gold Stock trading

Weekly Chart

HUI Gold Stock Trading

Parallel with the DOW, DAX, most of the stock markets & Gold, the HUI gold mining stocks went up as well during the last couple of weeks. 

So far at 380 points the rally ended last Tuesday. Since then the HUI is slowly moving down. A failure of support around 360-365 would be a sell signal.

Until now the buy signal created by the MACD in early July is still in play. The upper Bollinger Band (US$383,95) makes higher prices in the coming week possible. The flat 50d MA (351,56) and the rising 200d MA Tagelinie (297,32) are running parallel like they do on the gold chart. Everything looks nice.

But the HUI did not confirm the last high in the Goldmarket on Thursday which is a clear warning sign. Most of the time the gold mining stocks are running ahead of gold itself.

As well I have to remember you again that gold mining stocks are moving parallel with the broad stock market. If we see a strong sell off in the stock market this autumn the HUI will be beaten down too. But in that case we will have a great buying opportunity.

Conclusion

The next weeks will be very interesting. There are a lot of technical evidence for the final breakout to the upside very soon. But if the long term bear market in stocks shows up again Gold will be hit as well. I therefore recommend to watch the charts very carefully.

A rise above the US$ 990-1000 level confirms the seasonal pattern. Then we should see the next leg of this gold bull market and prices around US$1.500 in spring 2010. A pull back below US$940 indicates another wave of correction down to at least US$900-920 or even US$880-845. This could last even until early October before gold might be ready to challenge the 1.000 level again. By then (with a better COT picture) I expect Gold to be finally successful.

Gold Analysis

If you would like to receive these free trading reports or my trading signals please visit this link: Free Weekly Trading Reports - Click Here

By Florian Grummes
www.TheSilverGoldSpot.com

Learn to Trade ETF's While Your Making Money Trading

© 2009 Copyright Florian Grummes - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Florian Grummes Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules