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Urgent Stock Market Message

Gold Price Forecast 2009

Commodities / Gold & Silver 2009 Jan 22, 2009 - 12:54 PM GMT

By: Nadeem_Walayat

Commodities Best Financial Markets Analysis ArticleMy existing forecast for the Gold price trend during 2009 as of October 2008 has been for a volatile sideways trading range of between $930 and $700, subsequent price action has so far been in line with this. Therefore this analysis seeks to update the Gold Price expectations for 2009 in the light of "Quantative Easing" aka "Money Printing" as many gold investors are taking their cue from the recovery in gold stocks for much brighter prospects for gold to target a breakout to new highs during 2009.


TREND ANALYSIS - The rally from the October 681 low as expected failed to break above the previous peak of $936, peaking at $892, the subsequent price action has taken gold to a recent low of 800. The trend pattern continues to exhibit lower highs and lows which is a sign of weakness. Clearly gold needs to a. Make a higher low and b. Break the previous peak of $892 before the volatile but bearish sideways trend can change. Therefore the price pattern action still supports that of an overall trading range in the $920 to $700 region. The down sloping trendline continues to contain rallies, the first sign of positive developments would be for a break above this trendline.

PRICE TARGETS - There exists heavy support in the region of $725, and resistance in the area $870 to $930 which has had the tendency of suckering in weak money towards these support and resistance areas before each new swing in the opposite direction.

MACD - The MACD indicator has proved accurate so far in gauging gold price trend, current MACD suggests that there is more downside in the immediate future which targets a revisit to $800.

SEASONAL TREND - October to March is usually the strongest seasonal period for gold, current price action is inline with the seasonal tendency which suggests that if Gold is to break above resistance than the time to do that is in this period i.e. now. This therefore suggests gold could break above resistance in the coming weeks, to target $980, and thereby change the pattern for 2009 towards a range of $1000 to $800, rather than $920 to $720.

ELLIOTT WAVE THEORY - Elliot wave theory suggests a 5 wave decline to the October low, which implies the current rally is corrective and that the $681 low will likely be revisited.

Gold Forecast 2009 Conclusion

Gold Price Forecast 2009

The picture being painted by the above analysis is that of gold strength going into March that looks set to see gold break above resistance of $936, to target $960, however this strength will soon evaporate with gold again targeting a decline back below the breakout point to trade back below $850 by mid 2009.

Gold Forecast - March 2009 Targeting 960 high - 80% Confidence; Mid 2009 targeting a $820 Low - 75% Confidence

Chris Vermeulen presents excellent coverage of Gold trading by utilising ETF's in his commentary and newsletter.

This analysis forms part of my in-depth analysis and forecasts on a range of financial markets for 2009, to receive the complete forecasts to be published shortly in your email inbox subscribe to my always free newsletter .

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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 trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article. Republished articles must include attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Paul
23 Jan 09, 10:48
Eliott wave counts are wrong

Wave four should not enter the territory of wave one unless it is a seven wave impulse pattern . Wave A should be designated as wave 6 .


Nadeem_Walayat
23 Jan 09, 11:11
No Elliott Wave Tennants
Theres the flaw in most ellioticians interpretation of EW. In that there ARE NO TENNANTS ! Markets Behave differently and you have to go with that behaviour rather than whats written in a book.
Ironically, something similar occured back in Jan 2007 i.e. to ignore EW tenants and go with the way the market actually behaves.
Gold Bull Market set to resume
Where the market behaviour elliott wave count confirmed a bull market from $627 to $920 that came to pass.

I guess we will find out if by the end of Feb / Start of March whether T-Bonds are closer to 120 or 150 as you state, I know which one I am betting on ;)
Regs
15 Mar 09, 17:19
Any thoughts on Gold f

Thinking of investing in gold - any thoughts or updates to your gold forecast beyound March 2009.

Enjoying your posts

Cheers

R


Sher
25 Mar 09, 06:19
Revised Forecast 2009

Your analysis is excellent. This is very valuable information about the Gold.

Do you have the latest revised forecast from March 2009 to Dec 2010. If yes, please send it to my email address.

Thanks!

MS


allen hardnaught
28 Mar 09, 17:34
gold forecast, 2009

In the 2 days following the announcement by the fed of QE, J P Morgan increased its short position on gold by 1.2 million ounces in order to cap the price.

With market manipulation like this I fail to understand why you guys indulge in TA, of whatever sort.

Far better to analyse JPM business model, adding into revenues the $2,2 trillion in bonds that it sold in excess of treasury authorisation, and trying to figure when the largest crime syndicate on the planet might go bust.

That is when in my opinion you will see gold, (and silver) revert to its true value.


Ron
04 Apr 09, 12:44
Gold forecast by Walayat

Does Mr. Walayat have an update from his January forecast?

Markets are so volatile, I would like to hear from up as to his current predictions.

Thanks.


Ron Smith
04 Apr 09, 12:45
Gold price forecast 2009

Does Mr. Walayat have an update to his bearish January forecast? A lot of things have happened since them and I would like to know what he predicts now.

Thank you


Nadeem_Walayat
04 Apr 09, 20:55
Gold forecast 2009

My focus over the last month has been on analysing and trading the stock indices, I do intend coming back to gold within a week or so.


Harry
22 Apr 09, 04:43
Gold focast last Q 2009

Would like to know your forcast for gold for last Quater 09 & what your views are on ETF's as apposed to mining companies or fisical gold. Regards Harry Lloyd


Paul
23 Apr 09, 07:13
Gold Update

Hi

A couple of weeks ago you stated your Gold update was pending but as far as I've seen there has been nothing published since. Am curious to know is there a specific reason you've held back on the analysis or is it just a time constraint issue?

Regards

Paul


Nadeem_Walayat
23 Apr 09, 07:14
Gold Update

Time

trading room upgrades knocked me out of market activity for a week.

Can't give a date as my schedule where articles are concerned is first the UK economy, then stocks then gold.

Best

NW.


sara
07 May 09, 04:55
gold price in 2010

i would like to know if gold price will increase in 2010 or not......i am planning to buy gold so can you advise which is the best time to buy it


muhammad sulman
18 Jun 09, 03:50
gold forecast

i have already purchased gold. can u advise me when i will sold my gold.and one thing more have u made any new forecast about gold. thanks.


jacob pronk
23 Aug 09, 15:56
gold update and $US update

would appreciate a $us dollar chart from januari 2008 to april 2010, also the same gold chart januari 2008 to april 2010, looking forward about your forcast, thank you, jacob.


Nadeem_Walayat
24 Aug 09, 01:53
usd dollar
See updated analysis - http://www.marketoracle.co.uk/Article12727.html


N V SRINIVAS
25 Aug 09, 02:45
Gold Prices from jan 2010

I am a bullion trader I want to know the position of Gold Price in 2010. Can I buy and hold.


Nadeem_Walayat
02 Nov 09, 00:46
Gold Bull Market Forecast 2009, 2010 Update
Gold has had a stellar run of late, which recently saw Gold pushing to new all time highs on a near daily basis which has galvanised wider mainstream press attention to the precious metal with many gold bugs revising targets ever higher into loftier goals such as $2000 and even $4000+. Gold is one of the most popular asset classes both sought after by readers and written about by market commentators, and one of the most emailed query as to when will I update my original gold analysis of 22nd January 2009 which concluded during mid 2009, therefore this analysis seeks to project the Gold Price trend well into 2010.

Gold Price Forecast 2009 Evaluation.

My original analysis for Gold as of 22nd January concluded with a gold price trend higher into March 2009 towards a target of $960 to be followed by a subsequent decline into mid 2009 as illustrated by the original forecast graph below.

Gold Price Forecast 2009

The Gold price forecast proved to be accurate in terms of the projected impulse waves. This analysis seeks to project Gold forward several months into 2010.

Fundamentals - Inflation Driving Gold?

The problem with this scenario is that the inflation of the 1980's and 1990's did NOT drive Gold higher, so clearly the mantra of Inflation driving gold higher is not correct, especially as we are presently emerged in debt deleveraging deflation, and neither does discounting future inflation expectations hold up, as the Gold bull market is now into its 10th year with a gain of 400% to date.

Gold Secular Bull Market

From 1980 to 1999 Gold fell for 20 years, eventually it would bottom and embark on a bull market, eventually, the signs for this would be not in fundamental data, but contained within the price chart as Gold breaks the pattern of corrective rallies followed by the downtrend resuming to new bear market lows. Now some 9 years later gold has corrected the preceding secular bear market by 50% in time and 100% in price. Therefore gold is not in a new bull market which has already contained many vicious bear markets within it as we witnessed last October, so just bare in mind that this is not a fresh young bull market, therefore much of the talk of waiting for public participation to join in can be discounted.

U.S. Dollar / Credit Crisis

My earlier analysis of a positive trend for the USD clearly implies given the inter market relationship between a two for a weaker trend for Gold. However the risk is that amidst the next phase of the global financial crisis as the bankrupt banks have far from recovered, the next stage of the banking crisis accompanied by recognised inflationary panic measures of money printing which devalues all fiat currencies could give a lift to gold.

Quantitative Easing aka Money Printing Hedging

We are in a new world (for the west anyway) and that is a world of Quantitative Easing, the more the governments of the world print money and monetize debt the easier it is for governments to keep printing and monetizing ever escalating amounts of government debt to cover the government budget deficit gap. What this means is collective currency devaluation where relatively speaking there appears to be little change but in real terms the flood of money has to be seen in rising commodity prices and other scarce resources, after all the supply of resources is mostly known and the population of the world is not decreasing so the demand is known to be on an upward curve. Therefore as long as the central bankers are embarked on the experiment of quantitative easing that should give a lift to gold and other commodities as it increases inflation expectations and therefore inflation hedging using gold and more liquid commodities such as crude oil.

Gold Technical Analysis

ELLIOTT WAVE THEORY - The elliott wave pattern implies we are a strong bull market that has much further to run, i.e. in Wave 4 of a larger Wave 2 advance. This also suggests that the immediate future should see further weakness in gold towards $1,000. However, this is just a correction in the trend that projects to a price of more than $1,100 by the end of this year, with the trend continuing into March 2010 toward $1,200 before a more serious correction takes place.

TREND ANALYSIS - Gold's breakout to a new all time high is a clear signal of further strong advances. The support trendline is at $1,000 and therefore fits in nicely with the elliott wave correction projection target. After the uptrend resumes this trendline is unlikely to be revisited until the second quarter of 2010.

SUPPORT / RESISTANCE - Resistance lies at the last high of $1071, Immediate support lies across the string of previous highs of $1033 and $1007, therefore there is very heavy support whilst very light resistance overhead, which again is suggestive of a mild correction in the current phase of the trend.

PRICE TARGETS - The measuring move off of the $681 2008 low projects all the way to $1,350, which looks set to be an achievable price during 2010. Nearer term immediate targets extend to $1,100 then $1,200.

MACD - The MACD indicator signaled a Gold breakout at $960, with a firm established uptrend. The current correction is inline with that of a mild correction within a strong uptrend.

SEASONAL TREND - There is a strong seasonal tendency for gold to rally from November through January i.e. for the next 3 months. This is suggestive that the current correction is living on borrowed time and may not last much longer

Gold Conclusion

I started off this analysis skeptical of the prospects for gold given the 10 year bull run to date, but the price that is talking off the charts is pretty bullish! enough for me to consider accumulating a position. In the immediate future Gold appears to be targeting a continuing correction towards $1,000, after which it targets $1,200 by March 2010 and a price of $1,350 later during 2010.

Gold Long-term - Gold has broken out to a new high and it does look as though it is going much higher in the long run, there are multiple measuring moves that one can consider, such as 133%, 150%, 1.618% etc. However given the gap in time between the all time peaks, Gold of $2000 plus would now not surprise me.

Gold Bull Market Inter market Implication - Bearish on the U.S. Dollar.

Source: http://www.marketoracle.co.uk/Article14692.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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 trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

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