Gold Price - Where is it heading?

Apocalypto, could you please write dates Aussie style, 5th May... instead of Yank style, May 05! :

Cos it strains my poor brain double checking when it doesn't register right.

Kauri
Your gratuitous comments about long term fundamentals the other day are as useful as the many charts I see posted that have little or no commentary of merit, or belie lay interpretation.
While we have ASXgorilla grappling with the improbable predictability induced from time series Monte Carlo analysis of any data series, we remain equally beholden to the market for every next price point.
The common sense rules of price behaviour imply that overbought markets correct, and oversold markets correct.
That clearly leaves us with determinable probabilities of most likely direction in the very near term.
That direction is still "down", with a likely support point in the $850 range.
Aside from the technicals, and USD movements, the most important price driver currently is a need for cash from the fund community.
Accordingly, the balancing act they are performing is on one hand wanting a "long" exposure and the other converting some of that to cash.
This was most evident with the very rapid liquidation of positions immediately gold peaked mid-March.

Going back a few steps now, it is instructive to note that gold drove north several years back in an environment when US interest rates were rising. For gold bulls to place weight on gold rising when interest rates are falling is not logical!
The common theme, however, is the disintegration of the greenback.
Will Fed interest rate cuts further debase the greenback?
Most likely.
Are more Fed interest rate cuts on the cards this year?
Very likely.

But now we find a strengthening of the greenback, albeit marginal, in a climate not particularly conducive to consumer confidence and riven with hints of recession.
What gives?
The many backers of the greenback are weighing back in, buying up more debt, in the hope that it will prop up the dollar: A currency they are already heavily invested into.
The question presently unanswered is if their efforts will be enough to turn the tide.
My view is that they are way too early and way too optimistic.
Other threads have dealt with reasons why, so I'll stop my brief analysis here.

On topic, the probability of gold short term declining outweighs the opposite view.
Medium term (which I refer to as the period 3-12 months out) I expect 2 things. First, an increase of POG beyond $1150 and, secondly a consolidation into the $800s before a later rally that will commence from a base price around $900.

rederob said:

Your gratuitous comments about long term fundamentals the other day are as useful as the many charts I see posted that have little or no commentary of merit, or belie lay interpretation.

Click to expand...

This comment is clearly designed to 'bait' legitimate contributors on the forum.
It should be removed.
If you people can't make your point without sledging the other members, go and get some counselling.

Young Gun said:

I do use candlesticks, I wasnt having a pot shot at anyone. I guess I am primarily just venting my frustation at people posting negative sentitment because of 1 or 2 negative days. This is worse in the media. Every second day you read a differing view based on 1 days price action.

Click to expand...

I can relate to you there Young Gun. In the XAO and Immiment and Severe Market Correction thread I have been posting some of the good news in an effort to show it wasn't all that bad.

explod said:

Interesting you say that, Wavepicker is of the same opinion but there dose not seem to be a reason put forward as to why?

Can you give a take on this rationale?

Click to expand...

Explod, most of my commentry was in the XAO and Immiment and Severe Market Correction Thread where from late last year I indicated that I expected the market to go more sideways to slightly up in the medium term. Basically I started out stating that the market was so oversold when it hit the first big low. This was based on fundamentals and technically corroberated by a 'proportion' calculation that I indicated I might detail one day. I should do that soon, but I have a damn computer glitch that has been annoying the bludy hell out of me and I still can't screen dump to post a chart.

From about a month or so ago I first got a sense of 'proportion' that the plumeting USD was hurting the rest of the world probably more than the credit crunch. The fact that the Boe and ECB was not heeding the US calls to cut rates down in parallel and China was also standing steadfast and not revaluing to calls from the US, for me was the most important of all the factors that pointed to the US having to do much more than rely on monetry policy to fix the crisis. I even made the comment , I think in the Immement and severe Market Correction thread, that the US was not going to just stand back and watch all those companies and funds go bust without doing whatever they could to stop the rot.

Consequently, those fundamental system changes will improve the US economy structure a bit to give investors some short to medium term confidence in the US economy and USD. I agree they still have big problems but they are not going to phissezlle up overnight.

All in all my sense of proportion and the rythem suggested to me that this cycle was not going to be a crash but a hick-up.

As for the POG, you might recall I said late last year that the POG had more potential to go down than up. I was half expecting a deeper correction then, but it seems that the fear and flight to safety with a good dash of speculation kept the POG going. I suspect that fear and speculation has started to unwind all together in earnest now. But as I said earlier I don't expect the POG to crash, just loose some lustre for a few months or so before it kicks on later driven more by lack of supply than fear of a meltdown.

Kauri posted the warning anticipating a hammer candle. But as the day finished it ended up more spinning top and evening star. The evening star has been a good indicator for me as per one (then) hot stock, the RAU thread.

In summary there has been a lot of focus on what is wrong with the US economy and the fear of what if this and that collapsed, but little focus on the main macro international influences that also play a part in driving or turning the USD and consequently the flight for safety in gold.

PS. Probably a lot has to do with what people see in the numbers. As an example, recently US personal income rose a healthy bit but consumer spending didn't rise in proportion. The headlines were doom amd gloom that consumers weren't spending and the economy will get worse because they aren't spending. For me it was a good sign that people were starting to save a bit more which would give them the ability to service their existing debts better and lessen the amount of foreclosures, bankruptcies etc... which would have far stronger positive impact on the direction of the economy/markets than a bit less consumer spending would have a negative effect.

rederob said:

Kauri
Your gratuitous comments about long term fundamentals the other day are as useful as the many charts I see posted that have little or no commentary of merit, or belie lay interpretation.

On topic, the probability of gold short term declining outweighs the opposite view.
Medium term (which I refer to as the period 3-12 months out) I expect 2 things. First, an increase of POG beyond $1150 and, secondly a consolidation into the $800s before a later rally that will commence from a base price around $900.

Click to expand...

I hope you don't see this as gratuitious, but it was only two weeks ago that you were telling all that gold, from $1000, would increase another $200 on Fed rate cuts, and a further $200 on blow off blues, with no marked retrace untill $1500...

Charts may be confusing to some, for that I apologise... at the same time I also find confusing a call of gold consolidating in the $800's, particularly when Gold is flitting intraday between 895 and 905 at the time of posting... for a commodity that is priced at $900 it has to be the safest call going.. . now what reaction would I draw if I posted a chart with a $100 window for error... after only two weeks prior extolling the reasons why it would never happen.. unfortunately with charts you are nailed by the Fundementalists to a range of a couple of dollars... not $100..
Incidentally, hedgies are selling the Euro (and doing some serious stop hunting), also commodities and metals currently... for what it is worth..
and totoally off subject, US farmers are planning on planting their cornfields with soybeans this season.. just for a longer term heads-up.

Cheers
.......Kauri

lets not go crucifying each other because we cant predict (or verbally explain our gut feelings) what is going to happen short/med term

ffs if we could then wouldnt we be filthy rich and drunk on a yacht in the Mediterranean or something like that?

I value this and the imminent severe correction threads because of the discussions in them. Its all about seeing things from other perspectives and learning.

When you discuss what you think is happening and the factors you think are at play and then you later see what pans out you slowly get better at being able to predict what might happen short/med term.

Considering that gold has likely recently been forced down by the powers that be and sold by funds to stay afloat and that the US Govt & Fed have shown that they are really prepared to do _anything_ to stop any financial meltdown. Also the latest economic data (GDP, jobless claims, manufacturing) is looking brighter than what has been anticipated.

So.. it seems logical (in hindsight) that gold is being killed and the $US is recovering.

Add to it that there is now a feeling that European banks will be the next to have "problems" and force down rates in Europe as its surely being hurt by the high Euro.

We need to do this sort of breakdown of what is going on so we can make money short term

??

Kauri said:

as the long-term fundamentalists point out there is every reason for Gold to just keep on going one way... up... which, if you pick your timeframe, is almost guaranteed in any assett class,...

Click to expand...

barrett
You are welcome to your view, and me mine.
If there was a "bait", Kauri went fishing with it first.

Kauri
My timeframes are long and terminology to boot.
A "significant" retrace for me is a near term test of support, which is in the low $700s.
I don't see that.... yet.
I never discount what is possible.
I prefer to comment on what is most probable which I pitch from my personal perspective.
My comments of 2 weeks ago can be tempered with prevailing events, most important of which has been not just a massive, unprecedented(?), intervention by the US government into a freemarket economy, but a willingness to do it again and again.
That said, I still see Fed rate cuts as an essential market measure to prop up an economy that is ailing beyond what is presently visible.
I still see the possibility of gold going to $1500 before year's end.
I don't think that's the most probable outcome, but am willing to "put it out there".
I don't believe the current (short-run) bull in gold prices has been achieved, and until that occurs I don't believe we will see support tested. I view both as essential precursors to a sustained consolidation.

I cant predict what the market is doing but it seems that the most simple explanation of what is happening is the price being pushed up by small volume and then getting mulled down by 4 times the size. Trembling hand alluded to this in his blog and I think he is onto something. Seems like someone is offloading out the back door.

The last 3 or 4 posts are on the ball IMHO

What I would like to add is that on the 23rd March, Kauri posted a chart indicating bottom support at US$874 from which it bounced mid way through US trade overnight.

Looking back longer term on the charts this is now a solid area.

But..................... one can never say never

wavepicker said:

Now your making things up explod. That's simply not true or fair, or did you not read my last post to you.

I understand your emotion as Gold is falling back, I have been there too. I am still long term bullish like you and consider this a buying opportunity in the months ahead.

Click to expand...

Have been mulling this over and think that my comments were a bit over the top. Your technical analysis outcomes are very good.

My problem is that having been badly burnt in the past I have to stick to simple approaches which I understand, hence trend following backed up by fundamentals and tend to write off or take little note of the tech's.

It is a pity that many good contributers/and contributions are missed due to the very different personalities, methods and experience.

Funny though, without exception just about all of us see the gold trend up in the long term.

More compassion towards each other will go a long way

explod said:

Have been mulling this over and think that my comments were a bit over the top. Your technical analysis outcomes are very good.

My problem is that having been badly burnt in the past I have to stick to simple approaches which I understand, hence trend following backed up by fundamentals and tend to write off or take little note of the tech's.

It is a pity that many good contributers/and contributions are missed due to the very different personalities, methods and experience.

Funny though, without exception just about all of us see the gold trend up in the long term.

More compassion towards each other will go a long way

Click to expand...

I agree, it's difficult to everyone agree with each other (at least the short and medium term) when everyone have their own methods of analysising the gold market.

Likewise, I tend to place heavy fundamentals on gold with less emphasis on technical. Mainly due to the facts that i have not yet "developed" my own system for long term trend trading, and have not backtested it, verify it, simulate it, etc, etc. Maybe that I didn't want to use any of my short term trading techniques and system building knowledge into all of this, and made it all uncessary complex. hehe

Regardless, i have no idea about the short term movement now because I have had NO system for "trading" this at all.

If we are all agree on the long term trend of gold, I guess everyone will be looking to buy back the dips when evidences of support (where it is!) are holding.

I think Kauri was spot on 912 breached 888 resistance got $10 bounce , which then retested that low three times and land at the $874 support as Kauri stated .

I read Ks post and understand them , some you need to think about , but like myself , he's neither a bull or a bear , he states what he sees and plans a trade around it .

Like myself he is a believer in collective intelligence , from what I can gather over the period of times I have correspondended with him , which started over decade ago . ASF has allowed us to rekindle communications , and I have personally noted the growth in his skills . The man is in sync most of the time , but we all know the market is very hard to predict when over shoots follow though .

I think it's best to agree to disagree on those matters that bring up heat or friction , and debate them more eloquently , as the civilized persons we are would .

First bit of weakness in the $us dollar index tonight and gold starts to rise, is this the turn. And it is to be noted that silver crossed over first.

ithatheekret said:

Like myself he is a believer in collective intelligence , from what I can gather over the period of times I have correspondended with him , which started over decade ago . ASF has allowed us to rekindle communications , and I have personally noted the growth in his skills . The man is in sync most of the time , but we all know the market is very hard to predict when over shoots follow though .

Click to expand...

And here I was thinking his budgie was the brains behind the operation :bowdown:.

On the volume issue, does the cumulative up volume before a retrace equal the cumulative down volume on the smackdown? These guys know when to time the 'dumps' for best effect, in what is after all a relatively small market when compared to others on offer to the likes of hedgies etc. It lends itself to manipulation, you just have to 'get' the timing in sych with the 'bad guys' imp:.

A classic bull trap for the pleb shares, bargains approaching for gold stocks, keep the powder dry comrades :badass:.

explod said:

First bit of weakness in the $us dollar index tonight and gold starts to rise, is this the turn. And it is to be noted that silver crossed over first.

Click to expand...

Yep, $US looks to be coiling... (but I am weary as coils don't always break in the direction of the trend, mostly, but not always....), gold has rallied a tad...
I understand that the US rallied on Leemons raising being oversubscribed and uberbanks write-offs interpreted as "the worst is behind us", and the EZ not looking too flash going forward, but weary I am none the less...
Although anecdotally NFP is not going to be as bad as forecast.. .. if ADP comes in less than 60k we may get a pleasant surprise.. .. or so I am told..

One thing I am sure of is uncertainty and wide ranges.. I thunk...
Cheers
...........Kauri

What is that line on your graph Kauri? A daily pivot or support/resistance? Could be an indication of which way it will break in the short-term?

What is the duration of each candle, an hour?

MRC & Co said:

What is that line on your graph Kauri? A daily pivot or support/resistance? Could be an indication of which way it will break in the short-term?

What is the duration of each candle, an hour?

Click to expand...

Sorry about not labelling the timeframes.. $US is daily.. gold hourly...

the line is a type of trend indicator I have built ... along with a couple of others I tie in with it... blue for rising.. gold. for falling (pun not intended).. the points between are not a stop line, just an easy glance aid to the way I see the trend... hope it's clear... my wine glass is.. ..

ADP good.. now for factory orders and Uncle Bens talk... (incidentally if they are good and boost $US there is an $800mln vanilla USD/JPY going off at 103 @1000 NY).. then the real decider... Fridays NFP.. which by Challenger and ADP should be good for the $US??? I thunk.. (not to mention Almunia et al prattling on about China and M.E.)

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

Kauri said:

... hope it's clear... my wine glass is.. ..

Click to expand...

LOL!

Na, I can see you have triangles (and trend channels) and the blue/gold line following trends (some kind of flipper on the top graph) I am talking about the solid horizontal light blue line price seems to be oscillating around recently?

Cheers

How funny is this... the Silver Sammy Indicator, one for the contrarians. On some US forum.. whenever this guy has started a negative thread on silver, it's nearly always marked the exact bottom of the market, or just before. Scroll down to the chart in post #24 of the link below.. one false signal there, the rest are pretty much solid gold (or silver at least..) Apparently he started another thread on 1st April lol
http://goldismoney.info/forums/showthread.php?t=70854

LOL, I actually beleive I was talking to a trader yesterday, who told me of this guy. Dont remember the name, but sure it was on a gold forum and he was saying he actually takes plays using this guy. LOL!

I guess most of the population are contrarian indicators. Hence, why I give such weight to my put/call ratios, specialist shorting ratios and bull/bear polls.

Wonder if he is right this time! I dont think gold will do well over the next few trading days (just my opinion), but could well see a bounce after that!