Gold Price - Where is it heading?

[Sean K]

Watching the US markets and the high expectancy of at least a 50 basis point cut makes me think that we will need .75 for gold to rally again. Or, a more surprising 50 point cut before the official meeting. Or, Iran to blow up a US ship....

 

[josjes]

Technical chartist (Kauri, Barrett et al) where is the next support level ? It got through 869.8 briefly are we going to see 860 then 850 ?? Let us know, cause I am itching to get the bargain of the year

 

[CamKawa]

No, what he meant is that the prices of gold and silver are being MANIPULATED by very few "commercial" traders. These very few traders are solely responsible for keeping the precious metal prices down right now because if they weren't shorting, everyone else including the miners will be long, and I meant VERY net long. That would probably force the metal prices to shoot up to the moon.

+1

I think this may explain a bit of what's going on here. It doesn’t make sense to me that gold be slightly falling when the market is burning.

 

[explod]

I have noticed in the last 12 months that when stocks fall, particularly on Wall street, gold goes down with it for a few days.

Initially everyone wants out, then comes thinking time. They ask "what is the alternatives? ah.. grasshopper, gold is a safe haven and it is looking oversold"

Support at US$870/75 has held the last few days.

Interesting night ahead. Gold has regained weekly losses a number of times on Friday evenings. We will see.

 

[CamKawa]

I have noticed in the last 12 months that when stocks fall, particularly on Wall street, gold goes down with it for a few days.

Initially everyone wants out, then comes thinking time. They ask "what is the alternatives? ah.. grasshopper, gold is a safe haven and it is looking oversold"

"THE stock market closed in the red for the tenth session in a row, the first time for more than 15 years..."
http://www.news.com.au/heraldsun/story/0,21985,23072076-5005961,00.html

The troops are a bit slow to wake up aren't they?

 

[Temjin]

+1

I think this may explain a bit of what's going on here. It doesn’t make sense to me that gold be slightly falling when the market is burning.

I think people call it a "technical liquidation", that is when someone liquidate everything in their portfolio to meet margin calls, or have a need to raise cash urgently. And their portfolio probably include gold as well.

But could be something else. There are always the "boys" who are acting behind the scene to keep the prices down whenever they feel it is necessary.

 

[barrett]

Technical chartist (Kauri, Barrett et al) where is the next support level ? It got through 869.8 briefly are we going to see 860 then 850 ?? Let us know, cause I am itching to get the bargain of the year

I know only a few chart patterns and just started EW, practicing..
Explod, since I'm on the sidelines there's probably a more than even chance of a rally tonight lol

As for the bottom of wave 4 (in the next week or so), Kauri's 50% Fib retracement at 850 seems likely.. my wave count last week would have had this recent top as wave 5, which ended sooner than I expected, but the proportions weren't right, Kauri's count of it as 3 makes more sense. That would be more positive for the next month or so.. I guess a rally into the mid 900s would be conceivable after a near term dip to maybe 850?

Back on the very short term.. Hui already retraced 50% of its most recent rally, and the XAU about 58%. A relief rally in it and in gold tonight wouldn't surprise.. If Hui starts to stabilise around 850 spot I might be coaxed back out from under my chair

 

[barrett]

I think people call it a "technical liquidation", that is when someone liquidate everything in their portfolio to meet margin calls, or have a need to raise cash urgently. And their portfolio probably include gold as well.

But could be something else. There are always the "boys" who are acting behind the scene to keep the prices down whenever they feel it is necessary.

Yeah, in a selloff people tend to liquidate the things that have gone down the least. Pull out the flowers and leave the weeds, so to speak..

I am pretty sure that on Tuesday night when we double topped at 917 I saw some serious intervention happening live. A big seller entered the market right at the previous peak and began selling so relentlessly as to drive the price down $21 in a matter of 1 1/2 hours and create a convincing double top. They were dumping in large market orders at about 30 second intervals, seemingly with no regard at all for what price they received for their gold. In the middle of it all the selling stopped suddenly and completely for 17 minutes (morning tea at Goldman perhaps?) and then immediately re-started worse than ever for another hour or so. I may be wrong, but given the way they were placing these orders I found it almost impossible to believe that this was a person acting on behalf of their own or their clients' interests..

 

[Uncle Festivus]

Gone a bit quiet here lately. Here's a good read. Don't you just love those central banks, selling at the bottom. And now Britain has the same turkey in charge of the country who was responsible for selling (giving away?) a large chunk of their gold assets.

http://www.theaustralian.news.com.au/story/0,,23073640-23850,00.html?from=public_rss

 

[Sean K]

From todays news wire:

1040 [Dow Jones] Spot gold higher, shrugs off impact from slightly stronger USD but profit taking clips gains, says HSBC's James Steel. Notes market focused on interest rate cuts by Fed, has at least 50 bps priced in, and pullback on official announcement could lead to profit taking. Gold, other precious metals may derive more support from an increase in investor risk aversion related to bond insurers; should bond insurers run into difficulty raising capital to fund obligations, including CDOs, problems in credit market may resurface, helping gold. Spot gold trades at $884.20/oz, up $3.70 vs last NY close.(EFB)

1044 [Dow Jones] Spot gold steady, volatility could rise near term because of uncertainties in other financial markets, says Investec. But gold should benefit from flight-to-quality demand as stock market lags. Drop from last week's record high partly driven by selling from investors, funds to cover margin calls from losses in stock markets, amid fears of U.S. recession. U.S. markets shut Monday for Martin Luther King Jnr holiday. Spot gold up $1.05 at $881.55/oz. (EFB)

I'm even thinking that anything at or less that .50 point reduction will spell a significant sell off. .75 points and gold should go well through $900 again, and 1 point gold will shoot to $1000. (is that a ramp? )


(I'm still holding my key gold stocks through this turbulance [LGL and NCM] and have been tempted to add to positions with the US surely set to lower rates, as Helicopter Ben has intimated. Also holding for M&A potential.)

 

[explod]

From todays news wire:


I'm even thinking that anything at or less that .50 point reduction will spell a significant sell off. .75 points and gold should go well through $900 again, and 1 point gold will shoot to $1000. (is that a ramp? )


(I'm still holding my key gold stocks through this turbulance [LGL and NCM] and have been tempted to add to positions with the US surely set to lower rates, as Helicopter Ben has intimated. Also holding for M&A potential.)

Well.. you have given a bit of preamble/qualification so we could pass that.

Notice NCM is one of the few gold stocks to rise. In my view that will be new investment players moving in. Also hear that outlets for physical are starting to run off their feet.

Was at Matthey's last week and had to sit and wait for service.

Draw your own conclusions

 

[barrett]

The XAU:gold ratio went below 0.2 again Friday night. This is the most consistently reliable indicator in the gold sector that gold stocks are good value at the moment. I like to see it go below 0.19.. but I'm usually too fussy for my own good. So I reckon this is a fine time to top up on gold stocks, or start buying, especially the juniors (too many to mention but CRK, WEZ, DIO, CRE, OGD, etc, etc..) not recommending any of those per se, just examples of Aussie golds that have been hammered for no good reason while the gold price is going up. Funnily enough if the stockmarket recovers that could be enough to pull these up even if the gold price corrects further. On the rate cuts.. something has to be done about the US markets and the Bush 'package' did nothing.. that leaves it up to the Fed, who are undecided but given the parlous state of the markets my guess is a 0.5 cut. If the market had a sharp intraday fall there could be an early announcement. Even if not, some dovish language could tip the balance for gold.. remembering this is seasonal strength for gold so Asians (Chinese new year, Indian festival) will be buyers on dips.. I am still following Kauri's current wave count suggesting wave 5 is yet to come.. a possible run into the mid 900s perhaps, if not immediately.

 

[Sean K]

So I reckon this is a fine time to top up on gold stocks, or start buying, especially the juniors (too many to mention but CRK, WEZ, DIO, CRE, OGD, etc, etc..) not recommending any of those per se, just examples of Aussie golds that have been hammered for no good reason while the gold price is going up. Funnily enough if the stockmarket recovers that could be enough to pull these up even if the gold price corrects further.

I agree, that if there's a turn around and risk is back in style then the junior sector could outperform. Just depends on the risk appetite....Now, where's that turnaround??

 

[explod]

The XAU:gold ratio went below 0.2 again Friday night. This is the most consistently reliable indicator in the gold sector that gold stocks are good value at the moment. I like to see it go below 0.19.. but I'm usually too fussy for my own good. So I reckon this is a fine time to top up on gold stocks, or start buying, especially the juniors (too many to mention but CRK, WEZ, DIO, CRE, OGD, etc, etc..) not recommending any of those per se, just examples of Aussie golds that have been hammered for no good reason while the gold price is going up. Funnily enough if the stockmarket recovers that could be enough to pull these up even if the gold price corrects further. On the rate cuts.. something has to be done about the US markets and the Bush 'package' did nothing.. that leaves it up to the Fed, who are undecided but given the parlous state of the markets my guess is a 0.5 cut. If the market had a sharp intraday fall there could be an early announcement. Even if not, some dovish language could tip the balance for gold.. remembering this is seasonal strength for gold so Asians (Chinese new year, Indian festival) will be buyers on dips.. I am still following Kauri's current wave count suggesting wave 5 is yet to come.. a possible run into the mid 900s perhaps, if not immediately.

Yeh agree with your thrust but not all the picks. I agree with DIO CRK AND OGC??? (you said OGD) but not the others yet.

Initially the mid caps that are or almost producing will be the best value.

Your ones above and NEM, SBM, RSG, OXR, LGL and AVO., et.al.

The smaller caps will not attract the newcomers till a month or two into a larger uptick in my view.

The gold bugs have been fairly well loaded for some time so we have to put our minds to how newcomers will ease in. From the top down, ie NCM etc..

 

[barrett]

Explod, I agree and yep I meant OGC.. only really meaning others as examples of small/mid caps that had been sold off and that I'm considering buying, I don't own most of those ones atm cept RSG, OGC

Kauri do you think it's likely the double bottom in on Friday was c for wave 4? I don't mean to flog a dead horse but this rounding bottom seems to have reappeared, makes me wonder whether this is like the c in late nov.. an early finisher?..

 

[Kauri]

another little coily thing developed on the hourly chart...
Cheers
.......Kauri

 

[CamKawa]

I'm in two minds about the price. On one hand the price of oil looks like it's on the up but on the other maybe the central banks are keeping gold in the 870 - 890 range while the crisis is on.

I also have the concern that as soon as the market starts to recover the flight-to-quality factor that gold has becomes less important and the price will fall. Anyone have any comments on that?

 

[josjes]

another little coily thing developed on the hourly chart...
Cheers
.......Kauri

It just broke that sym. triangle (877 now), so the next support is 860, correct ?

 

[explod]

I'm in two minds about the price. On one hand the price of oil looks like it's on the up but on the other maybe the central banks are keeping gold in the 870 - 890 range while the crisis is on.

I also have the concern that as soon as the market starts to recover the flight-to-quality factor that gold has becomes less important and the price will fall. Anyone have any comments on that?

Yep, generally the markets will not recover. I look at 2008 as 1929 and the markets kept going down for 3 years. Financial mess appears even worse this time.

Dont' worry about gold, it will be soon seen as the only store of wealth at all because money has lost its value as it is backed by debt.

 

[CamKawa]

Dont' worry about gold, it will be soon seen as the only store of wealth at all because money has lost its value as it is backed by debt.

I hope you a right.