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
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold Ready to Begin Next Major Uptrend

Commodities / Gold & Silver Jun 06, 2008 - 12:30 AM GMT

By: Clive_Maund

Commodities Best Financial Markets Analysis ArticleGold is now in position to begin its next major uptrend, and in relation to where this uptrend is going to take it, it is considered to be at a very good price right now. According to the “Summer doldrums” crowd who are obsessed with seasonal factors, gold has to wait until August to go up, because everyone is preoccupied with Summer holidays, making the most of the good weather, pursuing pretty girls and looking after unruly kids released from the confines of school etc etc. Oh - is that so? - try telling that to Wall St traders who thought they were safe on the beaches of Long Island with their huge picnic hampers last August.


So let's get this straight - we no longer live in normal times and the markets are not going to wait on the convenience of people whose minds are not on their work. So if you are planning on strolling down to the station in August to find the train waiting for you, you may find that it left long ago without you.

On our 1-year gold chart we can see the fine uptrend that ran from last August, taking the price from approximately $660 to peak at about $1030 before it turned sharply lower and then proceeded to break down from the uptrend late in March. A classic bull market reaction followed that took the price back to strong support just above the 200-day moving average, after which it has stabilized, breaking out from the downtrend and in the process swinging the intermediate trend from down to neutral as a base area has formed above the 200-day m.a. The breakout from the downtrend was presaged by it taking the form of a bullish Falling Wedge. Even though the low at the end of April was considerably below the low at the end of March, the basing action can be considered to have started with the earlier late March low. Once the price broke out from the downtrend it quickly ran through the 50-day moving average, but as this indicator was still dropping back to close up its gap with the 200-day, it showed that the move was premature and this fact, combined with the overbought MACD histogram shown at the bottom of the chart, conspired to bring about the heavy reaction of the past week or two.

Emboldened by this drop, doom mongers have come out of the woodwork and have gotten hold of the ball again, telling anyone who will listen how gold is going to drop to $830 or even lower, when all that has happened over the past week or two is that gold has reacted back to test support at the top line of its earlier downtrend channel, and in the process allow the 50-day moving average to complete its return move back towards the 200-day, and the short-term overbought condition that followed the breakout to unwind.

The reality is that the present situation is very bullish indeed. The downtrend reaction has clearly ended as our chart shows - it has run its course and fulfilled its purpose of unwinding the excesses of the previous uptrend. Having broken out from the downtrend the price has since reacted back into a zone of strong support just above its still 200-day moving average. Now, with the 50-day moving average having reacted back most of the way to the 200-day, it won't take much of an advance to swing it back into an ascending trajectory, and this will result in a very favourable price and moving average alignment that typically occurs at the start of a major uptrend. Thus this latest reaction is viewed as providing an outstanding buying opportunity. Even if the Summer doldrums crowd end up being proved right, the worst we are likely to see is a trading range develop until the late Summer at and above the 200-day moving average. Sentiment in the Precious Metals sector is once again at abysmally low levels suggesting that we are likely to go up from here.

We will end by taking a quick look at the dollar. On our 1-year dollar index chart we can see that the dollar's uptrend over the past 10 to 11 weeks from its mid-March low appears to be nothing more than a weak countertrend rally within a larger downtrend, that has served to unwind the extremely oversold condition existing at that time. Now with the dollar running into the resistance level shown and approaching its steadily falling 200-day moving average, a resumption of the larger downtrend is to be expected, which will of course provide gold and silver with a following wind.

By Clive Maund
CliveMaund.com

© 2008 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

© 2005-2019 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