Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, Where Next?

Commodities / Gold and Silver 2010 May 17, 2010 - 02:25 AM GMT

By: Bob_Kirtley

Commodities

Best Financial Markets Analysis ArticleSo far in 2010, all eyes in the gold market have been looking up at $1225 wondering whether gold will get back to that all time high?  Now that question has been answered, yet another arises, where next for gold?


Our answer to that question is that we believe this rally still has gas in the tank to run higher.  Gold didn’t break its resistance at $1225 just to climb another $24 or 1.95% to $1249.  There must be more in this move.


Considering the chart above, gold appears overbought and prime for a drop.  The relative strength index is at 72.68 and above the 70 level which would normally be a sell for us.  Although we always load up heavily on gold when the RSI is on or below 30, we never sell when the RSI hits 70 during major rallies. 

Why?  Well, simply because when gold decides to go on a run it generally disobeys the RSI overbought reading as it simply continues higher.  

A textbook case of this is during that run to $1225 in late 2009, the RSI was well above 70 in early November while gold was just $1100.  Selling in early November because of the RSI reading would have missed a whole $125 move upwards.  And shorting the yellow metal at that time would’ve proved fatal.  With this example fresh in our memories, we will not sell gold when the RSI gives us a sell signal during major rallies, and the current RSI reading 72.68 does not deter us from being long gold.

Prior to breaking the $1033 major resistance with a follow through to over $1200, gold broke the $720 mark which was previously another major resistance.  From $720 gold subsequently rallied to $1033, a move of over 40%.  Gold made another 40% move when it surged through the $500 barrier to $720.  

One may infer from these observations that we are presently likely to get another 40% move.  

Considering the breakage of the $1033 resistance area, this gives us a gold price for the present move of $1446.20.  This is a rough estimate but it would not be unreasonable to expect gold prices to move up towards $1400/ounce during this major rally, and then when one factors in the possibility that these large moves could become even larger than 40% as the gold bull market progresses and becomes more volatile, prices higher than $1400 appear possible.

We normally look to the ultimate inverse gold price indicator, the US dollar, for more clues on what gold prices might do and when.  But since gold and the USD have recently been moving up together, this analysis technique isn’t too helpful.  However, investors should not lose faith in the gold bull market simply because this inverse relationship hasn’t worked recently. 

One should keep in mind that in the last gold bull market, gold and the US dollar moved up together, so it is likely that this could happen again.  Also, the fact that gold is rallying in spite of USD gains is a sign of great strength in the yellow metal. 

We think that in the long term, as the USD resumes its bear market down trend, gold prices will continue to move higher.  In the shorter term we believe that if the Euro should find its footing and begin to rise, as a result of perceived improvement in the sovereign debt issues in Europe, the USD will drop back slightly and gold price will likely take a hit.  For now, gold has become a safe haven investment sparked by unstable conditions in Europe.  

An improvement in European debt conditions would likely take away some of the premium presently given to gold.  However, if this should occur we expect gold’s price decline to only be temporary, since USD weakness will ultimately drive gold prices higher.  Essentially this could work out as a win-win situation for gold, albeit with the second win scenario of EURO improvement slightly delaying gold’s rise.

The bottom line is that the major rally beginning with the break out above the previous all time high of $1033 is not over yet.  We will likely see $1300 plus very soon.  And, we believe that gold did not recently break above its December 2009 high of $1225 just to rally to $1249.

 There is more to come! 

As we are now trading at all time highs, we are in unchartered waters.  Volatility should be expected, and in large doses.  Short term, gold could drop back to $1185.  Ideally, however, we would like prices to consolidate at these current levels so that $1225 will become a support level and a base for the next move up. 

To ensure that you optimize your investing and trading returns from the next move, please take a look at our website www.skoptionstrading.com. Recently our premium options trading service OPTIONTRADER has been putting in a great performance, with an average gain of 42.73% per trade, in an average of just under 38 days per trade.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.

Bob Kirtley 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