Gold Price - Where is it heading?

barrett · 18 April 2008

a, b, c 50% correction complete, 933 reached... and now a breakdown below the lower support of the wedge, on high volume. .. so this doesn't look good.. at all.. I had a little long going in the low 30's which I exited.. just before it plunged from 929 to 922 in one second..

GATA meeting began last night, sessions in progress today and tomorrow in Washington DC, that's heavy stuff and they will be trying for some publicity. Needless to say with all sorts of accusations being thrown around, the Feds will not want the gold price shooting up on the day..

barrett · 18 April 2008

There was a conversation here last week about 'gut feeling' in gold trading. I meant to add that mine is terrible... so bad that it might be useful..

Without question the most reliable trading signals I've had are the times when I felt 'desperate to buy'. These times have been close to the most profitable shorting opportunities in gold that we have seen.

Recently at 992-996, I could barely stop myself from phoning the broker to place a large bid. It was just before the top. Some weeks after that, I had the same compulsion at 952, immediately before the sharp correction to 870. And once again yesterday at 952, just before a fall to 907 within 24 hours. I doubt these 'peaks of emotion', if you like, are a coincidence - they happened at interim tops, and not at other times. In recent months, just those three times.

I've never followed through and placed a trade when I feel that way.. I recognise the emotion for what it is - unreliable - or is it? I doubt I could bring myself to go short under those conditions, but others may be able to profit, or confirm the call, etc.

I think we could find value in working on it as a team and coming up with key trading decisions based on what people are feeling at the time. Just an idea. Let me know if anyone else has had a similar experience and/or feels we might be able to cash in on it.. this is particularly relevant to our topic here, since psychology is the key to trading gold, more so than in any other asset.

Particularly interested if anyone who has found they experience really bad feelings when the gold market is bottoming, because I am finding I have an emotional reaction when the market is topping but not when it's bottoming.
Cheers

wavepicker · 18 April 2008

Looks like, the downward correction just became a whole lot more complex than the bulls thought.

We had a textbook EW 3 wave(abc) decline, and another textbook three wave abc advance. Three waves always unfold against the one larger trend. The one larger trend in this case is DOWN.

Another buying opportunity for the bulls perhaps, or another opportunity to cut their palms against the falling knife??

Temjin · 18 April 2008

wow, another onslaught from the "boys" again. Looks like someone is trying to prevent an breakout from the previous high and invalidate the bull's technical.

wayneL · 18 April 2008

Anyone for a more complex correction?

The grind up from April lows on reducing volume wasn't too convincing was it?

My gut feel is that "they" have drawn a line in the sand on the US peso; also the Fed has saved the world... errr, the banks from a liquidity crisis, several leading indicators are showing bullish on the SM, and the propaganda machine still has Joe Sixpack believing all is well.

Chop city for gold for a while IMO.

explod · 18 April 2008

If you go back over the thread you will find that I have said this many times. Gold is a political object now and the powers that be will do everything to keep the lid on it untill the US Presidential election at years end.

It is also worth restating that Fridays and Monday are picked in particular, Fridays as they carry over into the weekend and therefore have wider exposure/effect and Monday follow ups before the traders get going for the week. It is an extreme psycological warfare of holding the crap toether till the last gasp

But do not dispair the Gold bull will continue but the larger rises we expect may not come till the end of the year. However the underlying fundamentals for goldshine continue to improve as the financial situation deteriorates by the day. Those with physical will survive IMHO

Notice heading on Kitco tonight, "Spot Gold drops 3.5% due to Euro Weakness and Oil Price drop" and if one then looks at the oil price drop it is less than 1% and the currency differential even less. So at the start of trade in the US the sheeple read the crap and the job has been done.

Kauri · 18 April 2008

Kauri said:
I don't have a short term view of Golds direction currently,(well not one that I would post ), but the down-legs look impulsive whereas the up-legs, in particular the present one, look corrective??

Cheers
..........Kauri

Still looks that way to me...
Cheers
............Kauri

Kauri · 18 April 2008

Gold, in my opinion, is simply reflecting market sentiment...
Yesterday it was served up a Googly by Google.. expected 4c below.. came out with a +34c.. after market.. a little bit of confidence there..
Then Citi bowls up with a beamer... butt... the punter reckons that now that the big boys all have new captains they have taken the opportunity to clean out all the rubbish whilst they can still pin it on the old guard.. hence the impression that the worst is behind them and the team is now in rebuilding mode...
Add to that the various Fed boys spruicking today and the message they are lobbing out there..
Coupling, decoupling, derailing, PPT, leasing, political, whatever it needs to explain away the sentiment of the real players... the fact is Gold is a commodity traded by traders, and they move the market... follow what they follow ... I thunk...

Cheep cheep
..................Kauri

Kauri · 19 April 2008

Strongly supporting the USD and unsupporting Gold is the talk from traders that Macro funds and leveraged accounts are closing out their S&P contract shorts as well as USD shorts and at the same time, selling bonds and selling commodities. Hedge funds and CTAs continue to sell bonds with selling interest focusing on the five years . In addition, Fed officials continue to focus on inflation, underpinning yields with Fed"s Tosser the latest to express inflation concerns, following Lackie and Wisher yesterday.

Cheers
...........Kauri

PS... 5min chart

cuttlefish · 19 April 2008

Interesting chart tonight thats for sure ...

I'm less bullish in the very short term because these banks seem to be making it past the reporting season unscathed. Getting Watchovia to bring their reporting forward and with the bailout ('investment') was probably a sign that it was a reasonably orchestrated situation with the bad news coming out first followed by increasingly better news as the week progressed.

The reality is still not being faced - so the banks haven't gone bust (or have managed to avoid having to admit to it anyway) - but their profits are down and the whole liquidity crisis and housing crash isn't going to dissappear in a puff of smoke overnight so there's still longer term pain to come in the US imo.

That being said the prospect of a short term panic flight out of cash based investments into gold due to a complete crisis in the system seems to be reducing ... for the immediate future ... as I understand it they're still not properly pricing the write downs on the poor quality debt, and the provisioning doesn't seem to have increased that dramatically compared with the potential default levels.

There's also still the inflationary effect of the extra cash that has gone into the system which surely has to over the medium to long term keep the USD from making too much headway so I still expect USD weakness medium to long term as well.

The discount window stuff also probably allows a lot of stuff to be swept under the carpet for another few months and rolled over ad-infinitum so while thats in place its also hard to know whether all of the skeletons are out of the closet.

I don't deny the possibility of a bit of firmness in the USD and in Australian markets over the next few months, and possible continued consolidation for gold in the $850-$950 range, but I wouldn't be trusting that this is the end of the bear phase yet or that we're out of the woods on serious credit problems.

josjes · 20 April 2008

Is Oil too expensive or Gold too cheap ? I don't get it.

Gold to Oil ratio now is 7.89 to 1 ($916:$116). The last time the ratio is < 8 is back in Q4 of 2005, when it was $460 and oil $60. Since then Gold went up 50-60% to $720 high in MAy 2006 and and the ratio revert back to 9.5-10.

FWIW, the long term average of gold

il ratio is around 15.
But even if the ratio is 8.5 gold fair value should be around 980 now.

So either Oil is going down real hard or Gold is catching up real soon ?

wavepicker · 20 April 2008

Certainly looks like this is the start of another big leg down for both Gold and Silver. Would expect Gold to fall to at least $850 on this leg down.

Foreign currencies look like they are about to reverse as well here. AUDUSD pair forming an EW Ending Diagonal which is very bearish in nature and should lead to a sharp reversal between now and years end. I love these patterns, I specifically wait for those setups and they are my bread and butter.

Not saying with 100% certainty it's come to a completion yet(although it looks it), but certainly more upside looks limited from here and the cards stacked in the bears camp.

Cheers

Porper · 20 April 2008

wavepicker said:
Certainly looks like this is the start of another big leg down for both Gold and Silver. Would expect Gold to fall to at least $850 on this leg down.

Foreign currencies look like they are about to reverse as well here. AUDUSD pair forming an EW Ending Diagonal which is very bearish in nature and should lead to a sharp reversal between now and years end. I love these patterns, I specifically wait for those setups and they are my bread and butter.

Not saying with 100% certainty it's come to a completion yet(although it looks it), but certainly more upside looks limited from here and the cards stacked in the bears camp.

Cheers

Hello Wavepicker, any chance of a chart showing your thoughts if you have time, as I don't have data for currencies or Gold, Silver as yet.Thanks.

rederob · 20 April 2008

wavepicker said:
Certainly looks like this is the start of another big leg down for both Gold and Silver. Would expect Gold to fall to at least $850 on this leg down.

Foreign currencies look like they are about to reverse as well here. AUDUSD pair forming an EW Ending Diagonal which is very bearish in nature and should lead to a sharp reversal between now and years end. I love these patterns, I specifically wait for those setups and they are my bread and butter.

Not saying with 100% certainty it's come to a completion yet(although it looks it), but certainly more upside looks limited from here and the cards stacked in the bears camp.

Cheers

I agree with downward chance, and hope $850 is touched on.
The next major upleg needs a stronger base, and a lower low than of recent weeks is a good start.
As for currencies, don't care about short term as my view is that the greenback is on track for long term trashing. Anything in the more immediate term I gladly defer to traders. My view remains that a sustainable parity of AUD and USD will occur within 18months, and probably much sooner.

explod · 20 April 2008

The fact that gold was sold off so strongly on the late Friday US market after Asia and Europe had closed down is a clear indication of further impending problems and fear on the part of the Fed.

I now believe that gold may soon surprise on the upside. Support of around US$880 to 900 goes back to Janaury now so maybe 850 low a bit of hope more than reality.

Anything is possible of course.

wavepicker · 20 April 2008

Porper said:
Hello Wavepicker, any chance of a chart showing your thoughts if you have time, as I don't have data for currencies or Gold, Silver as yet.Thanks.

Hello Pete, Will do so, I don't have data for Gold or currencies and so will have to mark up EW labels by hand for now

Cheers

wavepicker · 20 April 2008

Porper said:
Hello Wavepicker, any chance of a chart showing your thoughts if you have time, as I don't have data for currencies or Gold, Silver as yet.Thanks.

My EW Musings for now:

IMO commodity EW charts should be done using a log scale. Either way for Gold we have a completed impulse here(or pretty close to it).
Have tried to count this as objectively as possible taking into consideration every little wavelet on the monthly chart. The same for the AUDUSD. I have had very good results with this line of the thinking and the key ofcourse is to view the chart without any preconceived notions of what the wavecount should look like.(I tend to shut out fundementals when doing this). Now that does not mean you completely disregard fundemantals but rather your first port of call when performing analysis should be price and pattern as the fundementals IMO lag the market not precede it.
I like to follow the rules and guidelines to the letter. It's important to not FORCE a count into a line of thinking you may have, just because you may have taken a position and are hoping for a particular outcome.

I know when highest probability outcome has been acheived when ALL the wavelets have been accounted for in a logical and systematic manner. An example of this was the DJIA last year:

https://www.aussiestockforums.com/forums/showpost.php?p=256837&postcount=112

Cheers

refined silver · 21 April 2008

Wavepicker, thats a very tradable $300 move you've marked out for gold. Let us know if you put on shorts to catch it, where and when. If you're right, thats a lot of money to be made.

No offence, but Prechter was the biggest EW guru with gold, and he's been calling for $250 gold ever since it broke over $400, so EWers haven't had a good record with gold this bull.

Also, I'm no EWer but if I was, I'd tend to start the count at the second double bottom, at end of 00, not first one in mid 99. The gold shares show it much clearer, that the second double bottom was the beginning of the gold bull.

barrett · 21 April 2008

wavepicker said:
Looks like, the downward correction just became a whole lot more complex than the bulls thought.

We had a textbook EW 3 wave(abc) decline, and another textbook three wave abc advance. Three waves always unfold against the one larger trend. The one larger trend in this case is DOWN.

Another buying opportunity for the bulls perhaps, or another opportunity to cut their palms against the falling knife??

Commenting here only on the shorter term, in EW I agree it looks like the recent multi-week rally was a B. So we can expect an impulse wave down to complete C.

One scenario is a 'sideways' correction, as in the past few major consolidations where C failed to make new lows - in that case C is nearly over.

Or - Friday's downmove nearly completed wave 1 of C... in that case, I agree we are headed to the mid to low 800s.

I see that as more likely, partly because of the potential for an interim top in crude oil within the next week, or already (below).

Usually some well known pundit capitulates at an interim top.. and this week it was, very publicly, T. Boone Pickens, who after being bearish for some time, suddenly turned bullish with an optimistic short term forecast. I also felt like buying (oil)..

Fundamentally I'm with T-Boone and others here and particularly bullish on oil.. but there may be room for a technical correction here....

Crude Oil, May08 contract

Porper · 21 April 2008

wavepicker said:
My EW Musings for now:

IMO commodity EW charts should be done using a log scale. Either way for Gold we have a completed impulse here(or pretty close to it).
Have tried to count this as objectively as possible taking into consideration every little wavelet on the monthly chart. The same for the AUDUSD. I have had very good results with this line of the thinking and the key ofcourse is to view the chart without any preconceived notions of what the wavecount should look like.(I tend to shut out fundementals when doing this). Now that does not mean you completely disregard fundemantals but rather your first port of call when performing analysis should be price and pattern as the fundementals IMO lag the market not precede it.
I like to follow the rules and guidelines to the letter. It's important to not FORCE a count into a line of thinking you may have, just because you may have taken a position and are hoping for a particular outcome.

I know when highest probability outcome has been acheived when ALL the wavelets have been accounted for in a logical and systematic manner. An example of this was the DJIA last year:

https://www.aussiestockforums.com/forums/showpost.php?p=256837&postcount=112

Cheers

Thanks for the chart and thoughts Wavepicker, looks good to me.On a different note if Gold does correct here, as the US$ rises, you would think this would be bullish for equities, which brings us to your point above, and try and place a wave count without the bias of fundamentals.Sometimes difficult to do !!

Refined Silver, it sometimes helps when the count isn't obvious, or not sure where the starting point is to work backwards, ie in this case start the count from the recent high.

Gold Price - Where is it heading?

barrett

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