By David Brady, CFA
Last week, I provided the fundamental background for why I believe the risk of lower lows in Gold remains, based primarily on USD/CNY breaking the critical 7 threshold. I also provided the rationale for the enormous rally to follow, driven by a reversal in policy by the Fed following a stock market crash and the subsequent ultimate peak in the dollar, including USD/CNY.
This week, let’s take a look at the technicals, sentiment, and positioning in Gold to see if it counters or complements the fundamental thesis.
Gold is currently heading higher in a bearish flag pattern. It could continue higher to resistance between 1251-1255 before heading lower again. Support is at 1200, also the previous closing low. A break down could open up a move down to 1184, 1160, or even 1124 next.
1251 is the key resistance area on the upside. It is the 38.2% retracement of the closing peak at 1360 in April and the closing low of 1184 in August. It is also the 50% retracement of the decline from the peak at 1377 in July 2016 and the December 2016 low of 1124. We have to take out 1251 in order to become any way bullish.
Then there is the 200-day moving average, at 1266 currently. A level watched closely by the Bullion Banks and the Algos. Through there, and the path back to new highs since 2016 becomes clearer.
I am already long ‘physical’ Gold (and Silver bullion) since August 2015 and have been adding ever since. I’m waiting to add more on a break of key resistance or at lower lows. However, if you don’t hold any Gold (or Silver), I recommend you buy “some” now, because it is only a matter of time before Gold heads multiples higher, in my humble opinion. (By “time” I mean within the next 1-3 years, but I believe it will start rallying in earnest in 2019, perhaps as early as next month.)
You can check out the full story here.
We also discussed the finer details and the thought process of our clients in a special episode of The Goldnomics Podcast which you can view here:
News and Commentary
Gold prices flat amid stronger dollar, investors look to G20 summit (Reuters.com)
Tensions rise as Russia fires on Ukrainian naval ships (MarketWatch.com)
Gloomy forecasts slash tech valuations as Silicon Valley chokes on smoke (MarketWatch.com)
Bitcoin’s haven claim is destroyed amid broad pummeling of riskier assets (MarketWatch.com)
How Will the Rollback of Dodd-Frank Affect Gold? (24HGold.com)
Gold prices shoot up to historic high at Rs63,700 per tola (Tribune(Pakistan))
GATA chairman discusses confession by ex-JPM trader (Gata.org)
Gold Is Setting Up For A Nice First-Half Rally (GoldSeek.com)
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Gold Prices (LBMA AM)
23 Nov: USD 1,222.15, GBP 951.69 & EUR 1,075.13 per ounce
22 Nov: USD 1,228.25, GBP 950.42 & EUR 1,074.72 per ounce
21 Nov: USD 1,224.00, GBP 957.29 & EUR 1,075.04 per ounce
20 Nov: USD 1,223.10, GBP 951.45 & EUR 1,069.97 per ounce
19 Nov: USD 1,223.55, GBP 951.07 & EUR 1,070.97 per ounce
16 Nov: USD 1,215.80, GBP 948.93 & EUR 1,073.07 per ounce
Silver Prices (LBMA)
23 Nov: USD 14.26, GBP 11.12 & EUR 12.56 per ounce
22 Nov: USD 14.52, GBP 11.26 & EUR 12.72 per ounce
21 Nov: USD 14.42, GBP 11.26 & EUR 12.65 per ounce
20 Nov: USD 14.44, GBP 11.24 & EUR 12.63 per ounce
19 Nov: USD 14.36, GBP 11.21 & EUR 12.57 per ounce
16 Nov: USD 14.29, GBP 11.15 & EUR 12.61 per ounce
Recent Market Updates
– Gold and Silver Hold Firm as Stocks and Oil Lower in to US Holiday Weekend
– Is Brexit a Massive Threat to Globalisation?
– Stock Markets Remains Extremely Overvalued – Hussman
– Stocks are Now in ‘Complete Bitcoin Territory,’ Asset Manager Says
– Brexit’s Safe Haven Is a Dangerous Place
– Gold and Silver Rise As Stocks Fall On Valuation Concerns, Italy and Brexit Risks
– Pound Falls 2.5% Against Gold as UK Government in Turmoil Over Brexit
– GoldCore Capitalising On Brexit With Dublin Gold Vault
– Store Gold In The Safest Vaults In Ireland
– Investors Set To Store Gold In Dublin Due To Brexit Risks
– Investors Start Buying Gold ETFs In October In Bullish Shift