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
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Forecast – Has the Recovery Finished?

Commodities / Gold & Silver 2019 Dec 06, 2019 - 12:40 PM GMT

By: Submissions

Commodities

Gold prices pushed sharply higher on Tuesday but have stalled ever since. Has the recovery rally completed? I think it has.

Leave it to Trump to go and say something that causes the equity markets to print a two-day drop that wipes out more than a week of gains. But the tone in the markets might be changing.

The US president went from saying that the trade deal might get delayed until after the elections on Tuesday to saying that talks with China are going “very well” on Wednesday. His shift in tone carried through the markets with the S&P 500 recovering and posting on a bullish engulfing candle on a daily chart yesterday.


In a similar fashion, spot gold printed a doji candle yesterday to signal some exhaustion following the momentum-driven rally in the day prior.

Correlations between equities and gold prices are difficult to gauge this year. After all, both instruments are posting double-digit gains for the year contrary to the typical inverse correlation.

But the recent recovery in the price of gold certainly appears to be driven by safe-haven demand. Further, we are seeing the inverse correlation with equities and gold returning on the smaller time frames. This leads me to believe that the upside in gold is either close to coming to an end, or has already ended.

This viewpoint relies heavily on the fact that US equities are breaking out over the past few weeks, and as yesterday’s price action is hinting of a bullish continuation.

Silver Daily Chart

Beyond that, there is also a bearish signal from correlated instruments. The price of silver, for instance, fell sharply to hit a fresh two-week low yesterday. Spot silver continues to trade below its 100-day moving average and it’s hard to make a bullish technical case. Yesterday’s fall has led to a bearish engulfing candle print on a daily chart, offering a strong bearish signal. We might see a small bounce with channel support and a horizontal level within proximity, but I would expect that bulls will jump at the chance to liquidate on an uptick after yesterday’s heavy price action in silver.

Technical Outlook

Gold Daily Chart

There is an area between $1480 and $1486 that previously acted as support and is now seen as resistance. Gold prices appear to have stalled out after entering this area.

But more importantly, I’m watching the upper bound of a declining trend channel that has encompassed price action since September. This is the major hurdle for gold prices, and while within this channel, there is little reason to expect a meaningful upward move.

Gold 4-Hour Chart

On a 4-hour chart, the shiny metal is also facing resistance at the upper bound of a rising trend channel. This channel has encompassed price action in the recovery that started around the middle of November.

The charts suggest to me that there might be some potential for one more leg higher, but I favor a bearish continuation at this stage, in line with the trend we’ve been seeing since the start of September.

By Jignesh Davda

https://www.thegoldanalyst.com

Copyright 2019 © Jignesh Davda - 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 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