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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Technical Analyst: Gold Price Weakness Should Be Short Term

Commodities / Gold & Silver 2019 May 24, 2019 - 06:48 AM GMT

By: Clive_Maund

Commodities

Technical analyst Clive Maund charts gold and explains why he believes gold will turn higher later in the summer. Gold and silver dropping back again late last week had investors in the precious metals sector feeling despondent, especially as their fears were magnified by at least one analyst calling for gold to drop to the low $900s or even lower, which is normal when prices sink, but our charts are instead suggesting that gold and silver are close to completing giant bottoming patterns that started to form (in the case of gold) as far back as 2013.

We can best see gold's potential giant base pattern on a 10-year chart. It can be described as a complex Head-and-Shoulders bottom or as a Saucer, and is best considered to be both, or perhaps as a hybrid having the characteristics of both patterns. In any event, as we can see on this chart, it appears to be drawing close to breaking out of it, which will be a very big deal if it happens, because a base pattern of this magnitude can support a massive bull market. As for timing it could take several months and it is most likely to happen during gold's seasonally strong period from July through September. To maintain the bullish case it must stay above the Saucer boundary.


Embedded within the giant H&S or Saucer base pattern, a fine Cup & Handle base has formed over the past year which we can see to advantage on the 1-year chart. The Handle part of this pattern may be regarded as a period of consolidation/reaction that has allowed time both for the earlier overbought condition arising from the rally from November through February to unwind and also for the moving averages to slowly swing into a much more favorable alignment, which has now happened.

On both of the above charts the drop late last week looks like "a storm in a teacup" or given the pattern shown on the 1-year chart, a storm just outside a teacup, and latest COTs reveal the reason for it—the Large Specs had suddenly become too bullish, which meant that they needed to be disciplined. While COTs have doubtless improved as a result of the drop on Thursday and Friday (we won't find out until next week), the Large Specs may require some more time in the correctional facility, especially as June and July are not seasonally good months for the precious metals, so it would not be surprising to see some more downside during the weeks ahead before both gold and silver take a turn for the better from July onwards.

The following seasonal chart shows that June tends to be somewhat negative for gold on average, although it won't be this year if Iran is attacked.

The conclusion is that the big picture for gold and silver continues to look strongly positive, although we may first have to contend with weakness between now and July due to the current downtrend coupled with negative seasonal factors until the end of June, which should present a window of opportunity to build positions across the sector ahead of the expected late summer advance that promises to be very substantial if gold succeeds in breaking above the key $1400 level.

Originally published on CliveMaund.com on May 19, 2019.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Disclosure: 1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. 2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Charts provided by the author.

CliveMaund.com Disclosure: The above repr0esents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. 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. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.


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