Gold Price - Where is it heading?

[explod]

Hi explod.

I meant profit forcasts... and or more write downs. Thinking along the lines of the credit crisis still hasn't run full course.

Noticing little things like previous economic numbers being revised for the worse and a view that some commentators aspouse that even the US gov is fudging the figures a bit to soften the blow. I believe the Bush administration has got more concerned about worsening developments coming into election year and is having meetings with people to try to soften the impact of the problem.

I guess my natural personality is a bit contrarian too, but still a long way to go to match the technical skills of Wavepicker, Kauri, Nick and others.

I'm appreciative of any critique... to see what I can glean from the experts and laymen alike, cos sometimes no matter how good we think we are at our job, sometimes a casual observer can notice something relevant that is outside the box of our thinking.

Just looking at the chart again, it's taking a while to make a break. That bear flag has been breached a bit top and bottom. Not looking so tidy anymore.

Apologies, your outlook is good. It is all a matter of context and I for one can become too wrapt up in my own view.

The gold price since its high last month has been very volatile. After such a climb (US$200 from the August low, the largest single rise in this bull run) it is to be expected that profit takers and the currency protectors would move in. The fact that it has not made a large retracement speaks volumes for buying interest and investment support. Although volatile I regard the levels of late as sideways consolidation. It may tonight through to Wednesday move down to US$760 but it will turn up again quickly due to the sheer force of investment interest and the growing doubts for the US economy and its weakening currency.

 

[barrett]

Hey guys, it's unclear from my data feed whether or not spot gold has broken through the upper channel boundary of its 1 week downtrend, can anyone confirm? (&can anyone recommend a good source for gold price charts based on continuous data? I am using bullionvault.com which is good live data but includes the weekends so difficult to chart ongoing trends from week to week.) Thanks for any tips guys,
Barrett

 

[Kauri]

Have now closed out all of my short gold and am starting to build on the long side, will add if and when my analysis indicates...
On the 60 min chart both the longer(green) and shorter(black) waves have both reached what I consider to be normal W5's and are showing signs of turning, although it is early yet.
On the daily I was originally expecting a drop into $750 and lower area, which hasn't come about... yet???. Also W2's don't form triangles..normally... However I can live with the current picture as for one the correction from the last upleg from June through November has corrected the best part of 35%.. along with other indications that I use... all point to a change, wether long or short term I don't know...
Cheers
............Kauri

 

[Uncle Festivus]

LONDON (MarketWatch) -- The European Central Bank said that it sold 42 tons of gold on Friday, in conformity with the central bank's gold agreement of which it is a signatory. That agreement limits combined annual sales by E.U. central banks to 500 tons a year until 2009.

{Alert - bored rant follows?}

So, a simplistic analysis implies that it takes 42 tonnes of gold 'dumped' to suppress the price about, say $80 max? Seems to have been easily absorbed by the market. Then again, there is some talk out of gold jewellry consuming nations (India & Dubai) that the high price has subdued demand. Price setting continues to be investors and/or speculators so maybe at the bottom of the consolidation range? Taking some entries on selected juniors at these levels.

Longer term, gold/oil ratio disconnection taking place, or trying to break out to the historical average of 17.5 bbl's per ounce, which would mean gold to go higher or oil to go lower? I would guess we could get both if recessionary fears are founded, and US interest rates continue to be priced in to be effectively zero, al la Japan style deflationary scenario, & the $US resumes it's death spiral.

Correct me if I'm wrong, but pog made a higher low, according to Kitco charts, which is bullish again? Leading into the rate cut next week - 25 or 50 bp's?

 

[explod]

Fine...whatever it takes to spin your crank..
but back to your original complaint... rest assured, your posts/opinions do not in any way affect the way I trade.. (which incidentally is what my posts are, real time posted trades without a hint of hindsight), to me, to put it politely, other peoples posts/opinions are irrelevant... Like it... or lump it..

Sorry Kauri, missread what was happening, did not mean anything personal. I try to anticipate what is going to happen from fundamental events which works well for me. The following type reports give me leads:-


"The Morning Gold Report by Peter A. Grant
Gold Soft Within the Recent Range
December 03, a.m. (USAGOLD) -- Gold is maintaining a soft tone within the recent range on weaker oil and a steady to firmer dollar. However, short term support at 775.00/772.65 remains intact at this point.

While the dollar seems to have found at least temporary support, the Gulf States continue to call for their currencies to be depegged from the greenback in order to squelch soaring inflation in the region. Such a move would further deteriorate the status of the dollar as the world's reserve currency. This could happen as soon as today or tomorrow. A resumption of the dominant downtrend in the dollar would probably push gold back above $800.

Inflows into the euro in recent months have been considerable, sparking plenty of talk that the euro may be the next reserve currency. However, the truth of the matter is that Europe is not in any better shape than the United States. In fact there has been talk lately that the EU may resort to "1970s era" exchange controls to halt the rising euro. This may indeed become necessary if the Gulf States break their dollar pegs as the resulting surge in the euro would probably put 1.5000 back in play versus the dollar. If this where to happen, the impact on Britain would be disastrous and could well lead to their withdrawal from the EU.

However, getting the members of the EU to agree on monetary policy if a crisis does ensue will be no small task. A recent blog at the Telegraph.co.uk described the EU as, "an arranged marriage of squabbling tribes, speaking different languages, who do not love each other, and never did." With confidence in Germany, the Netherlands and Belgium plummeting, Euribor rates soaring, liquidity drying up, it isn't a pretty picture across the pond either.

On top of all that, EU foreign policy was dealt a blow last week when efforts to find a solution for the Kosovo issue failed. It is now likely that Kosovo will declare independence from Serbia sometime after 10-Dec. While both sides have declared they will not resort to violence, this region has quite an extensive history as a geopolitical hot spot. With the euro not necessarily the safest of havens and the prospect for rising tensions, gold could well be the major beneficiary.

Resource Investor reports that large commercials have reduced their net short positions in the futures over the past three weeks. Author Gene Arensberg says, "and strong to very strong dips for the metals themselves should be bought in measured, incremental bites, ahead of the next tsunami of new wealth into precious metals."

With support in gold at 775.00/772.65 intact, a case can still be made for a symmetrical triangle pattern. Dips earlier in the European session that approached this level sparked some buying interest, but 800 must be regained to ease short term pressure on the low end of the triangle pattern. Such a move would return focus to 815.20/35 level, which is seen as the trigger for renewed attacks on the critical 845.55/850.00 highs." [end quote]

 

[Kauri]

My interest is perking up a touch...
Cheers
...........Kauri

 

[Whiskers]

LONDON (MarketWatch) -- The European Central Bank said that it sold 42 tons of gold on Friday, in conformity with the central bank's gold agreement of which it is a signatory. That agreement limits combined annual sales by E.U. central banks to 500 tons a year until 2009.

{Alert - bored rant follows?}

So, a simplistic analysis implies that it takes 42 tonnes of gold 'dumped' to suppress the price about, say $80 max? Seems to have been easily absorbed by the market. Then again, there is some talk out of gold jewellry consuming nations (India & Dubai) that the high price has subdued demand. Price setting continues to be investors and/or speculators so maybe at the bottom of the consolidation range? Taking some entries on selected juniors at these levels.

Longer term, gold/oil ratio disconnection taking place, or trying to break out to the historical average of 17.5 bbl's per ounce, which would mean gold to go higher or oil to go lower? I would guess we could get both if recessionary fears are founded, and US interest rates continue to be priced in to be effectively zero, al la Japan style deflationary scenario, & the $US resumes it's death spiral.

Correct me if I'm wrong, but pog made a higher low, according to Kitco charts, which is bullish again? Leading into the rate cut next week - 25 or 50 bp's?

I can't dissagree with you there Uncle Festivus.

I recall that the US were behind on their gold sale quota, up to I think September. I wonder whether they still have excess quota to sell and when might they do it?

 

[Uncle Festivus]

I recall that the US were behind on their gold sale quota, up to I think September. I wonder whether they still have excess quota to sell and when might they do it?

If they do have what they say they have, I would have thought now would be a good time to show their hand. GATA estimate that they are due to run out of price suppressing gold supplies right about now?


Shadowstats tells the true story - M3 out of control, inflation double the official rate, the US already in recession?

http://www.shadowstats.com/cgi-bin/sgs/data

PS looking to break $800 again tonight, see if it gets smacked down in NY trade?

 

[Kauri]

My interest is perking up a touch...
Cheers
...........Kauri

A tad shallow for a W2 but I need to hang my stop somewhere...
Cheers
........Kauri

 

[rederob]

I can't dissagree with you there Uncle Festivus.

I recall that the US were behind on their gold sale quota, up to I think September. I wonder whether they still have excess quota to sell and when might they do it?

What is this US "gold sale quota"?
The US is not signatory to the EU Central Bank God Agreement of 2004.
The US can dump or lease gold to its heart's content.

 

[explod]

What is this US "gold sale quota"?
The US is not signatory to the EU Central Bank God Agreement of 2004.
The US can dump or lease gold to its heart's content.

I would be interested to hear from yourself or others what bullion reserves the US still have? And in the face of the increasing demand, what power to still bring to bear on the gold price?

After the last US holiday (week or 2 ago) I noticed gold went up and when the US came back on the Monday (in light trade) it was pushed back down

 

[Kauri]

A tad shallow for a W2 but I need to hang my stop somewhere...
Cheers
........Kauri

Now have W1orA = W3orC potential, so stop is now closer still to the action... on my shorter time-frame trades that is...
Cheers
.........Kauri

 

[Whiskers]

What is this US "gold sale quota"?
The US is not signatory to the EU Central Bank God Agreement of 2004.
The US can dump or lease gold to its heart's content.

I'll try to find the article, rederob.

As I recall it was for the period ending last September, but rolling over again. I seem to recall the article particullarly mentioning Portugal, Germany and the US. I also seem to recall that it was a more recent agreement or ammended agreement to address the imbalance with the falling $US and rising Euro and consequential understanding that the situation was not good for either of them.

 

[explod]

I am going to stick my neck out and it almost always gets chopped off.....and say that gold in the next few weeks will hit around the US$1000 mark.

Based on my reading of learned pundits/anaylysts, fundamentals and technical indications.

Any other bids. I went 100% long gold stocks today. RSG the most responsive in the past was my main purchase.

 

[wavepicker]

I am going to stick my neck out and it almost always gets chopped off.....and say that gold in the next few weeks will hit around the US$1000 mark.

Based on my reading of learned pundits/anaylysts, fundamentals and technical indications.

Any other bids. I went 100% long gold stocks today. RSG the most responsive in the past was my main purchase.

Anything is possible int he market, but I don't see $1000 in the next few weeks. Perhaps $900 would be more acheivable in that timeframe.

I see this current juncture very differently. There is a chance this is a 4th wave tracing out here. It might be a contracting triangle(we will know in the weeks ahead if it consolidates further). A fourth wave contracting triangle always precedes the last move in an impulse. However 5th waves are known to extend on occasion in commodities because buy tends to be more "fear based" rather than hope based.

I am actually looking at the opposite trade to you once that 5th wave is finished, as 5th waves are built ultimately on psychological euphoria, not fundementals. IMO next year the bears will get their turn again, Gold bugs can go into hibernation for while again.

Cheers

 

[Kauri]

Now have W1orA = W3orC potential, so stop is now closer still to the action... on my shorter time-frame trades that is...
Cheers
.........Kauri

Just hanging in at the moment.. will be taken soon
Cheers
.........Kauri

 

[SGB]

I went 100% long gold stocks today. RSG the most responsive in the past was my main purchase.

I was wandering who was driving this stock up today. LOL
Good to see you jump aboard this stock explode. Although we don't get much volumn the spreads are pretty good.

 

[explod]

I was wandering who was driving this stock up today. LOL
Good to see you jump aboard this stock explode. Although we don't get much volumn the spreads are pretty good.

Maybe the growing weight of demand:-

[qiote]

SHANGHAI: Chinese demand for gold jewelry may increase by about 20 percent this year as rising personal incomes help the nation race ahead of the United States as the second-biggest market in the world, GFMS, a researcher, said.

Gold use in jewelry in China jumped 24 percent from a year earlier to 221 metric tons in the first nine months, a GFMS analyst, Veronica Han, said from Beijing on Monday, citing data compiled for the World Gold Council. That compares with 515 tons in India, the biggest consumer, and 165 tons in the United States.

Increased jewelry purchases by consumers in China and India may help to support the price of gold, which reached a 27-year high of $845.84 an ounce on Nov. 7 and is headed for its seventh annual gain.

"More economic development in China and a relatively higher savings ratio than that of India should in the long-term drive gold demand in China," Stephan Schlatter, the executive director for metals markets in Asia at UBS, said.

A stock market and property boom helped to raise disposable incomes among urban households in China by 13.2 percent in the first nine months of this year when adjusted for inflation. Retail sales rose by 18.1 percent in October from a year earlier, the fastest in eight years, the statistics bureau said Nov. 14.

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"China is poised to become the world's second largest jewelry market for gold this year, overtaking the United States and coming in No. 2 behind India," Philip Klapwijk, the executive chairman of GFMS, said by phone from Parati, Brazil. "I would expect it to grow further" in 2008, he added.

"We expect gold use in China this year to greatly exceed last year's level, with rising standards of living and some policy changes to encourage gold holdings by the public," Hou Huimin, a vice president of the China Gold Association, said in early November. Hou did not give details.

Even "with less aggressive growth in the fourth quarter," Chinese sales of gold are expected to increase by about 20 percent in 2007, GFMS's Han said. The GFMS estimate of gold use in jewelry excludes supply from scrap.

China has increased minimum wages, expanded welfare payments and reduced interest-income tax to fatten the wallets of its 1.3 billion consumers, who have a growing taste for luxury items like cars and jewelry.

"Upgrading of the retail environment and greater product varieties" helped gold demand, Klapwijk said. "The Year of the Pig also helped." This year's lunar New Year, the Year of the Golden Pig, is deemed auspicious for gold purchases.

"Almost everything has gone right for gold jewelry demand to pick up," said Klapwijk. "You had a perfect environment."

Chinese buyers have not been deterred by a 24 percent gain in gold prices this year as a slumping dollar and surging oil prices fueled demand for an alternative investment and hedge against inflation. Bullion for immediate delivery traded at $791.04 an ounce in Singapore on Tuesday.

Higher prices have lifted shares of producers like Barrick Gold, Newmont Mining and Newcrest Mining.

"Our long-term view is positive on Chinese demand," Klapwijk said. Still, growth of gold use in jewelry in the fourth quarter may slow, and the pace may also slacken next year if monetary policies aimed at curbing inflation reduce the rate of economic expansion, he said.

Chinese economic growth may cool to 10.8 percent in 2008 from an estimated 11.4 percent this year as investment and export growth slows, economists from the State Information Center said.

China may continue to face inflationary pressure next year, and the central bank should raise key interest rates, according to a report published Monday, which forecast inflation at 4.5 percent for 2008 from 4.7 percent this year.

[unquote]

 

[rederob]

Anything is possible int he market, but I don't see $1000 in the next few weeks. Perhaps $900 would be more acheivable in that timeframe.

I see this current juncture very differently. There is a chance this is a 4th wave tracing out here. It might be a contracting triangle(we will know in the weeks ahead if it consolidates further). A fourth wave contracting triangle always precedes the last move in an impulse. However 5th waves are known to extend on occasion in commodities because buy tends to be more "fear based" rather than hope based.

I am actually looking at the opposite trade to you once that 5th wave is finished, as 5th waves are built ultimately on psychological euphoria, not fundementals. IMO next year the bears will get their turn again, Gold bugs can go into hibernation for while again.

Cheers

Hmmm.......
Most immediate upside to $920 cap in my books, but not soon at all - likely in late Jan/Feb.
Present consolidation is a little unusual given some large intraday swings: No strong break with carry through for more than a few days.
Unless you are trading with a fast finger, then I think watching is the safer ploy.
I might be tempted to top up some goldies if POG gets back under $750 for a few days, otherwise will let ride what I have.
The only aspect of wavepicker's analysis I would disagree with for now is that I still see oil and POG running a coalition ticket. That being so, downside is very likely to be capped, while upside is equally likely to ratchet higher as greed feeds from the welling trough of subprime safe harbour.

 

[barrett]

What a messed up day on the gold markets, two false breakouts, and maybe god only understands what the gold price has done in the past three hours. Opinions anyone - is the weird market action over the past three hours bullish or bearish for the coming day? Personally I see it as being bearish since today's long pennant was broken to the downside, but I may be wrong.

Wavepicker I am seeing the same wave count as you. Once this fourth wave is over I am going milk the fifth for all it's worth.