Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Price Awaiting Outcome of Greece Crisis

Commodities / Gold and Silver 2015 Jul 13, 2015 - 06:08 AM GMT

By: Clive_Maund

Commodities

The situation is paradoxical - the charts of just about everything are positioned for a plunge - or a turnaround and limited recovery, which reflects the fact that markets are waiting on some sort of resolution of the standoff with Greece, either Greece walking away, a Grexit, or a fudge solution where Greece accepts defeat and is denied debt relief or it is obfuscated sufficiently for the markets to buy it and this may involve another "can kicking" exercise. While the charts for many commodities look scary, including gold and silver, their COTs now look bullish, which suggests that the fudge solution will be the outcome.


As far as the charts are concerned the situation remains the same as at the time of last week's update, with the risk of a steep drop by both gold and silver. Both broke sharply lower early last week but went on to recover their losses as the week wore on. The big difference is in the COTs, which have improved rather dramatically over the past 2 weeks, especially silver's COT, which is now flat out bullish, at least for the short to medium-term.

Let's now proceed to look at the latest charts. The 8-year chart for gold shows it positioned for a C-wave plunge to the $850 - $1000 area, but its latest COT chart shown immediately below, reveals that Large Specs have almost given up on it, which in itself is bullish - these sort of readings have almost always marked important bottoms in the past. The COTs for both copper and silver now look positive too, in copper's case after a quite steep drop. Here we should note too that the Chinese market has scope for further recovery after its recent brutal plunge, and the US stockmarkets are positioned to rally back to near their highs - if there is an easing of the Greek crisis.

Gold 8-Year Chart

Gold COT

The 1-year chart for gold shows that it is testing a zone of important support at its November and March lows, which is clearly a good point for it to turn up, although the positioning of the bearishly aligned moving averages close by above could force a breakdown to new lows.

Gold 1-Year Chart

It's worth digressing to look at the charts for copper, which provide circumstantial evidence of a possible intermediate bottom in commodities here. On copper's 1-year chart we see that it too is in a good position to turn up, because after a steep drop from its May highs which got panicky early this month, it is oversold and at important support at its January lows. We shorted copper early in May.

Copper 1-Year Chart

Copper's COT is now looking increasingly positive, with the ever right Commercials building a bigger long position...

Copper COT

The biggest threat to commodity prices is the potential for another big upleg in the dollar, and what happens with the dollar depends on what happens to the euro (the dollar index has a 57% euro weighting), and what happens to the euro now depends now on the outcome of the Greek mess. In the last update we pointed out that the dollar was poised to begin another major upleg - it still is, BUT the breakout attempt is starting to look shaky and like it could fail. If it does fail and the support in the 93 area on the index fails, which just to be where the 200-day moving average is, which makes it more significant, then things could get ugly fast. This may be what the positive commodity COTs are signaling.

US Dollar Index 13-Month Chart

What about the dollar hedgers chart? - it is still showing quite strongly bearish readings, although they have eased from the extremes of a couple of months ago. So the dollar could be topping out after all. The big dollar rally of the past year has been driven by a combination of the euro's woes and unwinding of the global carry trade ahead of an expected Fed rate rise. While it is hard to see the euro improving much, since a fudge solution of the Greek mess will only buy time for the beleaguered single currency, the carry trade unwind could stall out if the market senses that the Fed is bluffing re raising rates, because it can't due to its back being to the wall. This would probably be the reason for a drop in the dollar.

US Dollar Hedgers Position
Chart courtesy of www.sentimentrader.com

Now let's proceed to view various indicators for gold as usual.

The gold hedgers chart, a form of COT chart going back further, is starting to look quite strongly bullish, having improved markedly in recent weeks. This certainly suggests that at least a bounce is probable in the weeks ahead...

Gold Hedgers Position
Chart courtesy of www.sentimentrader.com

The Gold Optix has improved substantially over the past couple of weeks to levels that are flat out bullish...

Gold Optix
Chart courtesy of www.sentimentrader.com

Rydex Precious Metals assets readings are now strongly bullish, since the dumb Rydex traders are always wrong and their holdings are now at a very low level. Their holdings peaked at the top of the bearmarket rally late in 2012. Interestingly, we have seen a pickup in volatility in this gauge in recent weeks, suggesting that some Rydex traders may be having second thoughts.

Rydex Precious Metals Assets Chart
Chart courtesy of www.sentimentrader.com

Finally, it is worth keeping in mind that we are now entering the most bullish time of year for gold, as the seasonal chart below shows...

Gold Seasonality

Conclusion: while it may look like this update is a classic example of fence sitting, there is a good reason for this, since the situation depends on the outcome of something which is unknowable, except to God - the outcome of the negotiations between the EU and Greece. What we can be sure about is that the scales will tip one way or the other very soon, and we do have some indication in the COTs, which are suggesting that after much protest the Greeks will kneel before their European masters and live on bread and water for years - in other words the recent vote will be ignored. However, if they walk away and out of the euro, a global selloff is likely to be the result involving a rising dollar and falling commodities, including gold and silver.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2015 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