Gold Price - Where is it heading?

[Young Gun]

The trend line was broken and the price dropped aprox $10 in quick succession. Whilist the trend level was breached, it quickly subsequently rebounded. I expect that in the short term the price will trend sideways, unless large volume push the price above support.

Having trouble inserting the chart, if you want to see it

http://1younggun.blogspot.com/

 

[Kauri]

I'm being a tad cautious around these Fib levels... also note that the increase margin requirements.. for most commodes... kick in today/tomorrow???.. and that I read somewheres that hedgies are estimated to have $42Bln investment/punt in commodes...
Cheers
..........Kauri

 

[MRC & Co]

Has anyone been selling gold futures recently, as soon as New York comes online?

 

[barrett]

Hi Barrett
The Stockcharts chart is on log scale, Norths is on natural. You can convert Stockcharts to natural scale by unticking the "log scale" box in the menu below the chart - if you do this you get the same chart as Norths.

Hey thanks for the tip Forgot all about that log default on SC... so no problem with North's feed.

I guess the market is paying attention to both the linear.. since some long-term trendlines are appearing on it... and the log scale (eg support line formed on Monday)..
Was hoping to look at the log charts with MT4 but can't find that option..


Just noticing a cpl of things... gold newsletter sentiment dropped off a cliff by the end of last week, to a rock bottom 11.5% according to Hulbert
http://www.marketwatch.com/News/Sto...x?guid={1987E425-4997-4A1D-BCB3-1A6D99E48255}

That coincided with a strong medium-long term buy signal from the XAU:gold ratio of 18.5.

I hate to say it - seeing as I missed the 906-950 move... but in hindsight 906 did have some characteristics of major interim lows. One of those being just about everyone, me included, thinking it would go down further!... (mebbe it still will.. but either way we can't be too far away from a buying opportunity.. XAU:gold<0.19 usually only comes by about once a year, twice at best)

Something else about the seasonals following on from that Zeal article.. June and July usually bring weakness in gold because of the drop-off in jewellery demand in Asia. But this year Indian jewellery demand was, I gather, very small even in January, one of the 'big' months.. it's the investment demand that's driving the big price moves in this climate. I have come to expect mid-year weakness as 'given' and usually wait until then to top up on my favourite holdings.. but maybe this year the seasonal weakness in jewellery demand won't make any difference.

 

[barrett]

Has anyone been selling gold futures recently, as soon as New York comes online?

yeah I had the team working an order to dump 200 April GC at market.... I'm Ben by the way.............................. Bernanke:batman: hehe

 

[Uncle Festivus]

Here we go again?

 

[Young Gun]

Looking strong although I see it sitting at this level for a couple of days before trending upwards.

 

[Trembling Hand]

... also note that the increase margin requirements.. for most commodes... kick in today/tomorrow???..

What markets are you increasing margins, nothing changed on CBOT from what I can see. And why didn't that carrier pidgen land on my desk?

 

[Kauri]

What markets are you increasing margins, nothing changed on CBOT from what I can see. And why didn't that carrier pidgen land on my desk?

can't find the articlw now but here is one from a day or three back..

http://www.marketwatch.com/news/sto...x?guid={C4964D3D-4A03-4CF5-80A2-743709DE47E9}

and if you look closely you may see where the carrier pidgeon has been..

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

 

[CamKawa]

That article didn't metion gold though. Have margins been changed for gold? If they haven't could that make gold more attractive against other commodities or will it bring all commodities down including gold?

 

[explod]

That article didn't metion gold though. Have margins been changed for gold? If they haven't could that make gold more attractive against other commodities or will it bring all commodities down including gold?

Commodities and gold are different catigories which has been pointed out many times. They do move together at times in the same way that gold will move with the general market. Gold is aligned with currencies and the other with manufacture. As a general rule of thumb.

For followers of gold it is important to learn these distinctions in my view and there is ample information by going back over this thread.

Buffet says, 'never invest in anything that you do not underrstand" I am amazed at the number of people that appear not to follow this basic concept. And that is not having a go at you Cam, it is an alarming number.

 

[Trembling Hand]

The Margin required for a Futures contract is irrelevant. Anyone who is trading on minimum margin will be trading for......about 3 days. Forget about it. Futures margins are always changing and often the daytrading margins also get pulled.

Any decent trader doesn't base their R:R on margin.

 

[CamKawa]

Buffet says, 'never invest in anything that you do not underrstand" I am amazed at the number of people that appear not to follow this basic concept. And that is not having a go at you Cam, it is an alarming number.

I'm not a big fan of the whole gold is money thing and I view gold as a commodity. Here we are on the edge of financial disaster and if gold is money why hasn't it decoupled from the commodity sector?

 

[Kauri]

meanwhile... a coily may be forming???? (hourly)

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

 

[MRC & Co]

Has anyone been selling gold futures recently, as soon as New York comes online?

he he Woops that was meant to be Barretts quote.

Good analysis though Barrett, sentiment indicators usually predict changes in trends very well. Once this is backed up by price action, its time to move. Same as you though, my bad, let the volatility throw me out!

Cam, I agree as far as the gold is money thing! However, no doubt unlike other commodities, as mentioned previously, it is not bound by economic growth limitations. Like others, it is however, still a hedge against inflation.

Gold really needs stagflation to kick in, if this comes out within GDP and CPI figures, gold will head for the moon!

 

[Young Gun]

From a charting perspective I said I think gold with trade sideways for a bit however on the fundamental side i think we could be seeing a breakout very soon.

Pushing POG up are the following:

- Renewed fears about the US economy
- Bearish $USD currency depreciation contiuned
- Jump in oil prices due to supply concerns regarding pipeline explosion in Iraq
- Analyst just cut forecasts for the major American banks

What a difference 1 week makes, last week it was the end of the bear markets and a recovery in the banking sector.

 

[kransky]

fund managers needing cash (liquidity) and the fed (confidence in the $US) will be pushing gold down anytime it rises much so take any decent profits as they appear?

 

[barrett]

I'm not a big fan of the whole gold is money thing and I view gold as a commodity. Here we are on the edge of financial disaster and if gold is money why hasn't it decoupled from the commodity sector?

Gold and silver have decoupled materially from nearly all industrial metals in the past 8 months, with gold up 50% while copper has been flat and zinc, nickel and lead have come off their highs by 25-50%.

I suggest not thinking of gold as a 'disaster hedge' - 90% of the financial journalists in the world do - and they still can't explain why the price of gold tripled, or doubled depending on the currency, during 2001-June 2007 in an era of financial stability and consumption.

The reason it went up, and still is, is that gold's currency exchange rate is driven by investor anticipation of real interest rates in the paper currencies, which is influenced by overall commodity prices:

Real interest rate = nominal interest rate - consumer price inflation

A fall in overall commodity prices pushes up the likely future real yield on government currencies, making gold less attractive.


Just because the world has had an experiment with unbacked paper currency for the past 30 years doesn't change the fact that gold has been the currency of choice for humans for well over 2000 years. All previous unbacked paper currencies have failed, and the problems of the US dollar/empire are no different. Just history repeating itself before a stunned audience who can't be bothered reading about the last time it happened! (referring to some extended family and acquaintances there, not thread contributors).

People on my mum's side of the family in particular, think 'technology' will solve the problem. It's like um.... it's not that kind of problem!

That article didn't metion gold though. Have margins been changed for gold? If they haven't could that make gold more attractive against other commodities or will it bring all commodities down including gold?

The effect of the margin increases is often a brief pause or pullback in the affected commodities and gold could well follow suit whether or not it's affected directly.

A possible counter-influence to that is the end-of-quarter rebalancing going on at investment funds, who'll be trying to avoid showing long dollar positions on their books.

 

[Temjin]

Just because the world has had an experiment with unbacked paper currency for the past 30 years doesn't change the fact that gold has been the currency of choice for humans for well over 2000 years. All previous unbacked paper currencies have failed, and the problems of the US dollar/empire are no different. Just history repeating itself before a stunned audience who can't be bothered reading about the last time it happened! (referring to some extended family and acquaintances there, not thread contributors).

Isn't it funny that most people have already forgotten the facts above. History "almost" always repeat itself, and humans will never learn given their short life span, and memories.

 

[MRC & Co]

Gold and silver have decoupled materially from nearly all industrial metals in the past 8 months, with gold up 50% while copper has been flat and zinc, nickel and lead have come off their highs by 25-50%.

The reason it went up, and still is, is that gold's currency exchange rate is driven by investor anticipation of real interest rates in the paper currencies, which is influenced by overall commodity prices:

A fall in overall commodity prices pushes up the likely future real yield on government currencies, making gold less attractive.

Since gold has decoupled from commodities and real interest rates are driven by composite commodity prices, what else is influencing the POG?

If the likely future real yield on government currencies rises due to a fall in inflation expectations (lower commodity prices), then wouldn't nominal IRs also fall, leading to a balancing of currency yields?

I would say its a combination of this cost push inflation (staglation reality), leading to investment in commodities (China/India growth + inflation hedge). Add to that slowing economic growth leading to a cut of IRs, lower yield still on currencies. Which ultimately leads to an extremelly low (negative) real IR yield. Hence, for a rise in the POG.

Add to that the fact that base metals (Dr Copper etc) are bound by economic growth, leads a transfer of assets to gold to hedge against uncertainty, slowing GDP + inflation.

Confluence of facts (expectations) leading to the rise in the POG in my humble opinion.