Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Is the Selling Over In Gold?

Commodities / Gold and Silver 2011 Jan 27, 2011 - 02:02 PM GMT

By: Jim_Farrish


Are gold prices ready to resume the run higher? It has had an auspicious start to 2011 and the negative reports relative to the metal have been on the rise. The gold bugs are jumping up and down saying buy, buy, buy! And the other side is calling for the price to fall to $1050 per ounce. Who is right in the quest for profits in gold?

The reality is that they both maybe right. We have seen a short term pullback of nearly $100 per ounce for gold and it currently hit a key support level and held. Before we look at what opportunities are in gold, let’s look at what is happening to influence the price of gold. Risk in Europe, relative to sovereign debt, is alive and well, despite what you hear in the press. There is the free money program from the US Federal Reserve that was reinforced in yesterday’s FOMC meeting, US/China yuan arguments and trade are still on the front burner impacting trade relations, and the real threat of inflation in China and Australia. These, and more, are fuel for the argument that gold is heading higher. The average estimates are at the $1650 level by year end. Gold closed at $1343 as of this posting.

Support at $1320 held for now and that bodes well for a bounce in price short term. Part of the blame for the price decline has been hedge funds selling, but according to MF Global, the large sellers appear to be out of their positions and normal trading is resuming. That brings support into play and if buyers step in, a run higher could be the next move.

We reported in our updates if gold broke below $1317 to look for a short entry point as prices would likely accelerate lower. So far support has held and the push higher on Wednesday brought out some bullish comments relative to the upside.

There is underlying demand for gold beyond the speculation trade. Jewelers and central banks drive the price with physical demand. Russia has been reported to be adding to their reserves along with India and the Middle East. If the speculation wains short term (i.e. speculation or hedge fund selling) the physical demand could be the wild-card that keeps prices steadily rising.

Looking at the chart below (iShares Gold ETF, GLD) it offers a potential short term trade on a bounce off support at $129.50. The support is created in relation to the rounding top pattern. The bounce could draw enough interest short term to push the price back to $133.40 or the 20 day moving average just over $134. This could best be captured with an option trade.

On the downside I still expect the 200 day moving average to come into play eventually as support for the price of gold. At that point a longer term opportunity would be of interest. Thus, the short term trade opportunity is the bounce off support back towards the 20 day moving average and the longer term outlook is a test lower towards the 200 day and with a period of consolidation before making a run higher. The long term investment opportunity would be to add gold on this pullback. If the price pulls back again towards the 200 day moving average as support add to the position and look for gold to rise longer term (12-18 months) back towards the $1650 level as a target or $163 for GLD.

The Fed action or non-action following the FOMC meeting helped the price of gold rise off support. With the threat of an interest rate hike out of the question near term, and the continuation of the free money program, the short term threat is tabled for now. The bounce yesterday afternoon following the FOMC meeting benefited GDX, Market Vectors Gold Miners ETF which gained 3.8%. The bounce is in play the question is how much and how long.

Disclosure: Money Strategies nor it’s clients hold positions in these securities currently. If the conditions present themselves in the coming days we would execute positions in GLD.

Jim Farrish is the Founder and Editor of and  His primary goal is to educate people about investing.  He has taught workshops locally and nationally for over 25 years, teaching thousands of individuals, business owners, and advisors how to focus on achieving financial independence.  Jim Farrish is the CEO of Money Strategies, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Money Strategies, Inc., web site.

© 2011 Copyright Profit Confidential - All Rights Reserved
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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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