Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold No Reversal Yet

Commodities / Gold and Silver 2010 Oct 11, 2010 - 05:46 AM GMT

By: Seven_Days_Ahead

Commodities

Best Financial Markets Analysis ArticleThe latest leg of the long Bull run in gold began back at the end of August, when  the market made a succession of new all time highs, but today the market spiked higher and then sharply reversed.


The Technical Trader’s view:

WEEKLY  CHART

The medium-term in the Gold market looks very attractive.

The initial catalyst for the bulls was surely the Head and Shoulders continuation pattern that drove the market today to its minimum target of 1350 or so.

But the creation of a Continuation Triangle has given the market a additional catalyst to drive it better. The minimum move implied by that pattern is 1475.

Look closer.

DAILY Dec 10  CHART

The Triangle has been a powerful bull stimulus.

And the upper diagonal will act as good support on any pull-backs.

Today the market seems to have baulked at the resistance of the band of Fibonacci extensions 1370-1380 and may indeed come back to the 1290 level to test that support.

Certainly the good volumes and rising open interest do not suggest a trend reversal yet….despite the violence of today’s trading.

The Macro Trader’s view:
The latest leg of the long Bull run in gold began back at the end of August, when  the market made a succession of new all time highs, but today the market spiked higher and then sharply reversed.

Is this the end of the rally, the end of the trend or just yet another round of profit taking?

First, we need to understand what drives this market. Over the last several years Gold has rallied mainly during periods of Dollar weakness and or geopolitical tension. Most recently the main dynamic has been Dollar weakness.

But Gold is also supported by economic uncertainty and the policy mix that is generating. It is well understood that the Dollar is weak because of the fragile nature of the US recovery, but there are also serious concerns about the strength of recovery in the Euro zone, Japan and now the UK too.

The response from policy makers has been a little different in each case:

  • In the US the administration continues to preside over a very large budget deficit and debt build up with the Fed contemplating a new round of QE,
  • In the Euro zone, fiscal austerity has been the masterplan after the Sovereign debt crisis earlier this year almost broke the Euro, with the ECB supplying sufficient liquidity rather than QE,
  • In Japan the economy remains in the grip of deflation, the authorities are now intervening to weaken the Yen and the BOJ has cut rates to zero and announced a Bond purchase program,
  • In the UK the recently-elected government has put together a severe fiscal consolidation that may cause several quarters of slow growth and perhaps tip the economy back into recession. The response of the Bank of England has been to contemplate a restart of QE.

So in three of the larger economies the Central Bank is either reactivating or close to reactivating QE. The Gold market currently has little to fear from QE regarding inflation, globally it is tame, although less so in the UK.

But what un-nerves investors and attracts them to Gold is the nature of the current economic climate and the policy responses it requires. Quite literally no one really knows how all this will end since other post WW11 recessions have been completely different.

While the likes of Fed chairman Bernanke has studied the great depression at great length no two economic periods are the same. The world is a very different place to the 1930’s with many previously economically primitive countries now economic powerhouses that are challenging the older developed economies for dominance.

This is why we judge Gold is currently so attractive to investors and indeed Central Banks. Since the current environment looks like persisting at least into much of next year, gold looks set to make yet more all time highs, so for us, we are now likely witnessing a correction which should ultimately provide fresh buying opportunities.

Mark Sturdy
John Lewis

Seven Days Ahead
Be sure to sign up for and receive these articles automatically at Market Updates

Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.

© 2010 Copyright Seven Days Ahead - 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.

Seven Days Ahead 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