Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Makes New Highs in Major Currencies Except U.S. Dollar

Commodities / Gold & Silver 2009 Feb 15, 2009 - 08:42 PM GMT

By: Clive_Maund

Commodities Best Financial Markets Analysis ArticleWhile gold has made progress since the last update, it has not not broken out to new highs against the dollar as expected, because the dollar has held up. Nevertheless it has made satisfactory progress and has made new highs against many other currencies.


On the 1-year chart for gold in dollars we can see that after being capped by the final fanline shown and the resistance at the September - October highs for several weeks, gold broke out above these restraining factors just last week, putting it in position to make a run at the highs of last March soon. However, should it do so in the short-term it is then likely to consolidate/react for quite some time, due to the overbought condition that will then exist, for an immediate advance to the area of the highs will result in it being very close to the upper boundary of the steep uptrend channel shown, and will take various oscillators to oversold extremes, including the slow stochastic shown on this chart, and we should note that this indicator is already at an overbought extreme, suggesting that gold could enter a reactive phase anytime now, which is certainly made more likely by the bearish Rising Wedge that has shown up on the Precious Metals stocks index charts, a factor that led us to ditch many gold and silver stocks last week in expectation of a reaction, after riding them up from the November - December lows. Another factor pointing to a reaction soon is the big increase in the Commercials' short positions in recent weeks.

Even if gold does go into reverse soon, either from its current position or after a run at the highs, we should keep in mind that the technical picture and the outlook for gold is very positive indeed, and it would be very odd if it wasn't. With many countries around the world expanding their money supply and dropping interest rates to zero in a desperate attempt to stave off deflationary implosion and maintain competitive advantage, it is the perfect environment for both gold and silver to maintain robust bullmarkets. In addition, with the bankrupt United States heading rapidly in the direction of anarchy and disintegration, the longer-term outlook for both the dollar and US Treasuries is very bleak indeed. Should a run on these commence, as looks inevitable and which will trigger a funding emergency in the US , then gold and silver will go parabolic.

Looking again at the 1-year chart for gold in dollars we can see that the break last week above the September - October highs has broken the run of descending highs and lows of last year and that the trend therefore is swinging from down to up. In addition the the 50-day moving average is now rising up through the 200-day, which should soon turn up, a technical development known as the "Golden Cross" because it frequently marks the start of a major uptrend. Should we see a significant reaction in the short-term, either immediately, or after a run at the highs, it will be viewed as an excellent buying opportunity.

The long-term chart for gold in Euros shows that it is doing just fine, although clearly it is getting overbought here, calling for consolidation/reaction soon. While it could run at the upper channel boundary eventually, its current overbought status suggests that it will soon react back into the lower more moderate channel.

Since a bearish "gravestone doji" appeared on the dollar index chart last month it has broken down from its intermediate uptrend by moving sideways, and it has failed to get above the doji day intraday high. These developments retain bearish implications despite the dollar index having held up, especially as it has failed to get close to the highs of last November. However, a big reason for the dollar index having held up is thought to be the worsening problems in the European Union, that are bringing about a resurgence of nationalism that could conceivably result in the EU being torn apart which would probably finish the Euro as a currency. Since the dollar index has a heavy Euro weighting this would explain its relative buoyancy. It is the severe problems in the EU and their negative impact on the Euro that could result in the dollar index chart breaking out to the upside, something that would otherwise be hard to comprehend given the dollar's terrible fundamentals.

The decidedly bearish looking charts for the precious metals stocks indices such as the HUI and XAU indices are difficult to reconcile with the generally positive charts for gold and silver. One possible explanation for this is that the broad stockmarket is about to tank again. The prevailing wisdom is that the broad market has bottomed, which is given credence by the fact that it has somehow managed to hold up despite a continuing avalanche of bad news. This is especially the view of the mainstream media which of course makes it all the more likely that it will break lower again. Should the broad US stockmarkets break to new lows it is expected to trigger a tidal wave of selling by the disillusioned bottom fishers who bought recently, that can be expected to lead to heavy collateral damage to Precious Metals stocks, as the "baby is thrown out with the bath water" in time-honored fashion. Should this happen gold and silver would probably escape relatively unscathed.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2009 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