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
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
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

Can Gold Price Finally Recover?

Commodities / Gold and Silver 2014 Sep 17, 2014 - 01:00 PM GMT

By: Clif_Droke

Commodities

Gold recently fell to its lowest level in seven-and-a-half months as the dollar rose to a 14-month high. Easing tensions in Ukraine and the Middle East also acted as a drag on gold and silver prices. Investors have been asking the obvious question as to whether gold can recover from here and if a bottom of at least short-term duration is imminent?


Dollar strength has been especially hard on the precious metals of late. Commodity prices in general have been beaten up in recent weeks by the surging U.S. dollar index, as sagging gold and silver prices attest.

Both the U.S. dollar and commodity prices in general are largely determined by the relative strength of the U.S. economy. With the economic recovery now in its fifth year, investors (especially foreign ones) are increasingly attracted to the U.S. as a safe haven. Economic weakness in the euro zone has galvanized a flow of "hot" foreign money to the U.S. dollar, further bolstering the dollar while at the same time depressing commodity prices.

Along with a strong dollar, another reason for the recent weakness in the gold ETFs has been a curious plunge in the level of short interest. For instance, the iShares Gold Trust (IAU) was the target of a large decline in short interest during the month of August despite a weak price trend.

As of August 15th, IAU short interest totaled 1.19 million shares, which represents a decline of 48 percent from the July 31 total of 2.29 million shares, according to Stock Ratings Network.com. Based on an average trading volume of 2.19 million shares, the days-to-cover ratio is currently 0.6 days.

Meanwhile ETF holdings for gold have continued to shrink with preliminary data for August revealing an outflow of 11 tons and flows in September have started the month off on a negative note at nine tons.

Earlier we examined the Market Vectors Russia ETF (RSX) for signs of a technical breakdown in Russia's stock market. A plunge in the RSX below the low from early August would suggest turmoil ahead for Russia on the Ukraine front, which in turn would be a major catalyst for gold bulls to charge. Lately, however, RSX has remained well above the August bottom as the cease-fire talk between Ukraine and Russia has gained momentum. As you can see in the following chart, RSX is now well above its August low of 23.00 and has bought itself at least a temporary reprieve. In turn, gold and silver have suffered as the safe haven trade unwinds.

RX Daily Chart

More than perhaps any other factor, gold has been at the mercy of the macro environment, as Barclays recently observed. News from around the world hasn't done the gold price any favors lately as the yellow metal continues to search for a much-needed fear catalyst.

The December gold futures price has under-extended from the 30-day moving average by nearly 4 percent as of last week. This is significant since a long-term research history of gold shows that whenever price extends by approximately 4 percent above or below the 30-day MA, a technical reversal usually follows shortly thereafter. Gold is technically oversold on a short-term basis and is therefore vulnerable to a relief rally in the upcoming days. The extent and magnitude of the next relief rally, however, will depend in large measure on either a large short interest (which apparently doesn't exist right now) or else buying interest among institutions and hedge funds looking for bargains.

How to Read Chart Patterns

Stock traders have long known of the extraordinary profit potential that chart patterns can unlock. The ability to properly "read" a stock chart is an incomparable skill whose value can be limitless.

In the book "How to Read Chart Patterns for Greater Profits," I explain the method I've used to successfully forecast stock price movements for nearly 20 years as a professional. By combining both classical and unconventional chart reading techniques with market internal signals, a simple yet effective method for correctly anticipating stock price movements is obtained. Discover how the skill of chart reading can revolutionize your stock/ETF trading by ordering your copy.

Order today and receive an autographed copy along with a copy of the book, "The Best Strategies For Momentum Traders." Your order also includes a FREE 1-month trial subscription to the Momentum Strategies Report newsletter:

http://www.clifdroke.com/books/readingchartpatterns.mgi

By Clif Droke

www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke 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