Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Breakdown to Provide Final Opportunity to Load Up Ahead of Major Rally

Commodities / Gold and Silver 2011 Oct 17, 2011 - 07:32 AM GMT

By: Clive_Maund

Commodities

Best Financial Markets Analysis ArticleNews has come in that "Germany and France are spearheading a multi-trillion dollar “shock and awe” programme expected to be agreed next weekend and presented the following week at the G20 summit in Cannes. The international community may provide further support after the G20 agreed that the IMF should “consider new ways to provide on a case by case basis short-term liquidity to countries facing systemic shocks”.


The IMF will report back on what measures it would offer at the summit in Cannes." This should be music to the ears of gold and silver bulls and is of course exactly the sort of "solution" we have been expecting - and since we have aligned ourselves with the Commercials, exactly the sort of solution they have evidently been expecting. The solution involves a massive blast of QE which will be highly inflationary and thus will drive gold and silver and other commodities higher. European leaders appear to have at last learnt this universal solution to all problems large and small from the US, and although it doesn't really solve the problems at all and in fact makes them ultimately worse, at least "it kicks the can down the road" and keeps leaders in power for a while longer.

Over the past week gold has advanced slowly towards a clear resistance level in the $1680 - $1710 zone. This is a very important resistance zone as it marks the lower boundary of the earlier top area, so it will be a big deal if gold can climb back above this level. You will recall that in last weekend's update we had classed the current holding pattern as a potential bear Pennant, but now, even though gold may back off short-term, the action of recent weeks is viewed as a basing pattern that should lead to renewed advance before much longer. Because of the strength of this resistance level and the fact that gold has got back up to it quite quickly we should not be surprised to see gold turn tail and drop short-term, perhaps back to the support in the $1600 area, which is also suggested by the weak volume on the rally this past week which indicates that gold is not yet ready to take out the resistance. We should not be upset by this and instead use it as an opportunity to build positions further, as it is now thought unlikely that gold will drop below $1600 after which it is likely to turn higher and drive through the aforementioned resistance. It is now thought highly unlikely that gold will drop to the "aggressive accumulation zone" shown on our chart. In addition to the powerfully bullish fundamental factors set out above, the gold COT charts remain strongly bullish, and are little changed from last week.

The latest copper COT charts also provide circumstantial evidence of an impending big rally in commodities, with the habitually wrong Large and Small Specs going short copper while the Commercials are now quite heavily long. The Large Specs got slaughtered after their July euphoria when copper challenged its highs.

The dollar has reacted back sharply over the past 2 weeks, probably due to the prospect of resolution of the acute crisis in Europe. It is now oversold short-term and on support near its rising 50-day moving average, and is therefore entitled to a bounce. However, if we see some real progress in Europe and easing of the crisis there in coming weeks, then all of the gains made during the recent rally could be given back – and the rest, as the dollar has only benefitted in the recent past by default – due to its status as “King of Hell”.

In conclusion gold looks set to break down short-term and drop as the dollar stages a recovery rally, but the expected drop should be nowhere near as severe as the September plunge, and it will provide a final opportunity to load up with gold and Precious Metal investments generally ahead of the major rally that the COTs are presaging.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2011 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2022 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