Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Mixed Emotions for the Gold Market

Commodities / Gold and Silver 2014 Sep 01, 2014 - 12:56 PM GMT

By: EconMatters

Commodities

Gold Crosscurrents

The Gold market has a lot of crosscurrents at the moment with the main negative as we write that it doesn`t pay a yield, and given the abundance of cheap money chasing every utility, bond and stock that pays a yield it has lost favor in that regard the last several years.


Bearish Factors

The interest rate cycle is also a negative for gold, and as the Fed starts hiking rates Gold usually needs other strong factors to overcome this headwind. The other headwind is that there currently isn`t a momentum trade, and since Wall Street often trades with a herd mentality, in the absence of a strong trend money just doesn`t get sucked into this trade.

Bullish Factors

Some of the bullish factors for gold are geo-political concerns, but this has mainly just provided short covering rallies so far this year, no strong bullish trend emerges after the short covering. Another will be if inflation starts ramping up, and inflation expectations start spiking ahead of the Fed`s ability to get in front of the inflation curve by being too deliberate on rate hikes.

If we start getting some insolvency issues in Europe once again Gold could start ramping based in Euros as investors try to hedge their European currency risk. There are physical buying bullish pressures as consumers generally like to own gold, and they especially feel like they are getting a bargain when prices sell off. Both for the gold bugs that envision an ultimate end to global fiat monetary systems where currency debasement runs its course in an extreme momentous collapse scenario, more moderate hedgers, and countries like India and China who traditionally favor gold on a cultural basis.

Shark Attacks

Consequently there are a lot of cross currents in the gold market, and so far in 2014 we haven`t really had the severity of ‘shark attacks’ in the market from the big banks like we saw in 2013. You know the kind where 3 banks all downgrade gold overnight, gold drops like a rock for 200 to 300 dollars, causing forced liquidations, and then once the short covering occurs gold goes right back to where it was originally trading before the shark attacks. This is a ‘shark attack’ and many markets experience them from time to time where a bunch of players gang up on a market to make money in the short term.

Read More >> The Oil Market QE Premium Is Coming out of Price

Federal Reserve

I do think for the near term gold investors should be worried about the downside, and I am talking about the futures market, (however, this still effects the physical market in the short term) as you saw some nervous exiting before the Jackson Hole speech, they just didn`t want the exposure before the event given the chance that Janet Yellen really signaled to financial markets in a strong manner to start exiting positions that were based upon 25 basis point borrowing.

Read More >>> The Fed Misrepresenting Inflation to Justify Inept Policy

Rate Hike Cycle

Along these lines, as the biggest driver is probably going to be the upcoming rate hike cycle by the Federal Reserve in the US, and the Bank of England early next year with expected rate hikes, there are bound to be some hawkish interpretations made, and gold is going to get smacked around real hard sometime in the next three to six months.

Hot Inflation Readings

Unless there is some counterbalancing force like inflation spiking well ahead of current market expectations around the 2% level, some of these hawkish market undercurrents with regard to monetary policy are going to play out in the gold market putting downward pressure on the commodity. Just how far it goes, and to what degree does bearish sentiment bring in players who don`t normally play in the gold market will determine how much of a sale price buyers get before they feel it is safe to come in and take advantage of lower prices for their beloved commodity.

Forced Liquidations of 2013

What happened last year is that some buyers stepped in initially at a level they thought would hold, and the gold market took another leg down, and those forced liquidations provided a real buying opportunity for gold last year. But remember the Fed didn`t actually raise rates last year, what happens when there are actual rate hikes after seven years of easy money? We will probably follow up with an article on the technical levels to watch, but the bigger point right now is just to be aware of what is coming down the gold turnpike, there will definitely be some substantial ‘shark attacks’ over the next six months, and expect some downside pressure for the commodity.

Gold Bears Have Wind at their Backs as Technicals likely to fail to downside over Near-Term


The feeling here is that the last six months will seem comatose to the volatility and strength of some of the moves in the gold market that are about to occur as key technical levels of support fail to hold. We not only expect these technical levels to get tested, we expect that the momentum during this period will be sufficient enough to break many key technical levels that have held so far this past year. Be selective and careful in playing the long side of the gold market in the near term as the primary catalysts and ultimate drivers are probably bearish in the near term, and gold bulls will be running against a severe headwind in the market!

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2014 Copyright EconMatters - 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.

EconMatters 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