Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Can Gold Price Climb to $1400/oz?

Commodities / Gold and Silver 2016 Mar 12, 2016 - 04:06 PM GMT

By: Jordan_Roy_Byrne

Commodities

At the start of 2016, renowned fund manager and bond king Jeff Gundlach predicted Gold would surge to $1400/oz. That was quite the call considering Gold was still in a bear market. He reiterated his target a few days ago in a webcast. Gold closed the week below $1260/oz after reaching as high as $1287/oz following the ECB decision. Corrections in both Gold and gold stocks have been limited to swift declines lasting no more than two days. While we cannot predict the future, we think there is some chance that Gold could reach Gundlach's target before a sustained correction.


Below is the Gold recovery analog chart or bull analog chart. We compare the current rebound to those from major lows seen in 1976 and 2008. By the way, it is great to be constructing bullish analogs rather than bearish analogs. As we can see, if this recovery in Gold continues to follow the path of those two recoveries then Gold could reach $1400/oz before correcting. The analog hints that if Gold reached $1400/oz then it could correct $100-$120/oz.

Gold Recovery Analog

While Gold's monthly and quarterly charts show very strong resistance around $1330/oz, its weekly chart argues that $1400/oz is the next major target after $1300/oz. In other words, if Gold can make a weekly close above $1300/oz, then it has a chance to run to $1375 to $1400/oz. Note that $1375 is the 38% retracement of the entire bear market. Initial resistance is $1300, which is the measured upside target from Gold's recent, small breakout.

Gold and Gold CoT Weekly Charts

Note that Gold's current net speculative position is 39% of open interest. While this appears bearish in the recent context of a bear market, Gold is now in a bull market. From 2001 to 2012, Gold's net speculative position, when high, ranged from 50% to 60%. Moreover, the current net speculative position remains below 2014 to 2015 highs of 44% and 49%. If Gold wants to move above $1330/oz and towards $1400/oz, the current setup of the commitment of traders report won't stop it.

Furthermore, open interest in Gold surged to 499K contracts. That is the strongest open interest in more than 4 years! Rising open interest usually confirms an uptrend. Note that from December 2001 to May 2002 open interest increased 90%. From December 2008 through March 2009, open interest increased 50%. Over the past five weeks open interest has increased by 30%.

When a market makes a strong rebound following a difficult bear market, investors and pundits suddenly become cautious due to the subconscious fear that the bear will reassert itself. We have even made the same mistake in recent weeks, thinking Gold and gold stocks would correct before another strong leg higher. While the possibility remains, there is equally as much evidence that Jeff Gundlach is right and Gold will reach $1400/oz before any setback. Gold and gold stocks have refused to correct for more than a few days at a time. Do not be surprised and unprepared if this run continues. Also, any extended weakness in Gold or gold stocks is a buying opportunity.

Consider learning more about our premium service including our favorite junior miners which we expect to outperform in 2016.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2022 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