Gold Price - Where is it heading?

[Sean K]

Anyone else see a H&S in the short term spot gold chart with the neckline at 915 and the tip of the head at 986?

 

[bean]

Do we have a massive H & S on the HUI
Will there be panic selling soon in the Gold stocks as the HUI breaks down under 380. Sellers believe the Gold Bull is over?

 

[>Apocalypto<]

Do we have a massive H & S on the HUI
Will there be panic selling soon in the Gold stocks as the HUI breaks down under 380. Sellers believe the Gold Bull is over?
View attachment 22796

Bean you're back!

 

[rederob]

Do we have a massive H & S on the HUI
Will there be panic selling soon in the Gold stocks as the HUI breaks down under 380. Sellers believe the Gold Bull is over?
View attachment 22796

The short term rally of the USD is about to end.
Oil's falls are also nearing an end, pro tem.
Most likely to be business as usual for the oil and gold bull in the next week.

 

[VViCKiD]

hi rob,
just wondering wat ur reasoning behind this was??

 

[Whiskers]

What is the real price of gold atm?

 

[wayneL]

What is the real price of gold atm?

Depends on which contract they're quoting.

 

[Sean K]

Approaching that 8% drop that josjes said would never happen again unfortunately. Unfortunate, unless you've been short. The drop seemed to coincide immediately with his up up and away claim.

I'm not one to rub salt into wounds, but I got a slap on the wrist from fellow members for being critical of this call. I think his last card, 8% drop never to happen again, has just been broken. Looking forward to your next definitive call on gold josjes.

I've no more eggs, or pies.

 

[Whiskers]

Depends on which contract they're quoting.

They're both supposed to be live spot.

I have kitco Kcast live digital (updated every minute) with link to chart on my task bar and just use the other occassionally for charting but have never known these two to differ that much before.

 

[wayneL]

They're both supposed to be live spot.

I have kitco Kcast live digital (updated every minute) with link to chart on my task bar and just use the other occassionally for charting but have never known these two to differ that much before.

Yeah, but what exactly is "spot"? Physical cash market? Nearest futures contract trading? Near most liquid futures contract?

 

[Whiskers]

Yeah, but what exactly is "spot"? Physical cash market? Nearest futures contract trading? Near most liquid futures contract?

My understanding is the spot price is the price that is quoted for immediate settlement and delivery... maybe a day or two.

Since both sites say spot price and are US sites I presumed they were both NYMEX... but that is not made clear.

While the low about 895 was about 1/2 hour behind on kitco, they are both in sync again now.

 

[Sean K]

You've made me wonder what the heck I am trading on IG Markets 'Spot Gold' price.

Is it Spot, or Might be Spot, or Close to Spot, or IG synthetic.

 

[wayneL]

My understanding is the spot price is the price that is quoted for immediate settlement and delivery... maybe a day or two.

Since both sites say spot price and are US sites I presumed they were both NYMEX... but that is not made clear.

While the low about 895 was about 1/2 hour behind on kitco, they are both in sync again now.

NYMEX is a futures exchange, so no immediate selttlement/delivery there, nor over at CBOT....
just found this - might explain (different to the "spot contract" in futures).

In gold - the futures price, minus cost of carry.

Spot price
From Wikipedia, the free encyclopedia
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The spot price or spot rate of a commodity, a security or a currency is the price that is quoted for immediate (spot) settlement (payment and delivery). Spot settlement is normally one or two business days from trade date. This is in contrast with the forward price established in a forward contract or futures contract, where contract terms (price) are set now, but delivery and payment will occur at a future date. Spot rates are estimated via the bootstrapping method, which uses prices of the securities currently trading in market, that is, from the cash or coupon curve. The result is the spot curve, which exist for each of the various classes of securities.

[edit] Spot prices and future price expectations

Depending on the item being traded, spot prices can indicate market expectations of future price movements in different ways. For a security or non-perishable commodity (e.g., gold), the spot price reflects market expectations of future price movements. In theory, the difference in spot and forward prices should be equal to the finance charges, plus any earnings due to the holder of the security, according to the cost of carry model. For example, on a share the difference in price between the spot and forward is usually accounted for almost entirely by any dividends payable in the period minus the interest payable on the purchase price. Any other price would yield an arbitrage opportunity and riskless profit (see rational pricing for the arbitrage mechanics).

In contrast, a perishable commodity does not allow this arbitrage - the cost of storage is effectively higher than the expected future price of the commodity. As a result, spot prices will reflect current supply and demand, not future price movements. Spot prices can therefore be quite volatile and move independently from forward prices. According to the unbiased forward hypothesis, the difference between these prices will equal the expected price change of the commodity over the period.

A simple example: even if you know tomatoes are cheap in July and will be expensive in January, you can't buy them and take delivery in July, since they will spoil before you can take advantage of January's high prices. The July price will reflect tomato supply and demand in July. The forward price for January will reflect the market's expectations of supply and demand in January. July tomatoes are effectively a different commodity from January tomatoes (contrast contango and backwardation).

 

[Whiskers]

Since both sites say spot price and are US sites I presumed they were both NYMEX... but that is not made clear.

The quoted 'Spot Price' matches the LGE quote.

So, these US sites must trade through and quote the LGE... but in true US patriotic and misleading style, kitco quotes NY time while USA Gold quotes AESDT.

 

[Sean K]

Here's another view considering a few factors pointing to gold stocks putting in a bottom and rallying later in August.

http://www.kitco.com/ind/swanson/jul302008.html


Discusses Seasonal gold:

gold has a tendency to make a peak in the April-May time period and then consolidate through the end of August and then breakout in September and have its best months through the end of the year. This seasonal pattern held true in this gold bull market except for last year when the whole stock market experienced its first subprime meltdown last August.

The XAU and gold ratio:

The XAU to gold ratio has traded between .16 and .27. Basically when the ratio is under a fifth of the price of gold (.20) gold stocks are cheap when compared to the metal, especially when the ratio gets under .19. As we are about to go to press the XAU to gold ratio is getting close to .18

Bollinger bands:

with the HUI lower 200-day Bollinger Band now at 385 the HUI is near long-term support.

Stochastics:

Momentum indicators for the HUI and XAU, such as the daily stochastics are now oversold. Once they bottom and begin to rally I expect them to test their July highs within a few weeks. I then expect that they'll consolidate a bit more and then breakout by the end of August to begin a new bull run.


Looks like oil might be pausing for the minute, but I've seen some $100 calls. Certainly needed to make a pause after the parabolic run up to $150 in short time. Was obviously overdone and POG was going to be effected during a correction pending other events.

 

[Sakk]

Strong bottom reversal signal for Goldcorp code:GG (US Stock)

Placed a buy stop 39.00 limit 39.39 ISLP 36.67

 

[MRC & Co]

Good 'spot' Sakk. Out of interest, you don't wait for confirmation by the following candle for these shooting star and hammer reversals? I find it one of the most crucial elements. Of course, you miss a small part of the profits, but quite a number of these hammer reversals can fizz out if there is not follow on confirmation.

 

[MRC & Co]

NYMEX is a futures exchange, so no immediate selttlement/delivery there, nor over at CBOT....
just found this - might explain (different to the "spot contract" in futures).

In gold - the futures price, minus cost of carry.

Good article Wayne.

As I understood it (only studied stock index futures), the price is simply spot, plus cost of carry and divs. So, assume no divs and the interest rate is 1.5% for a month, then the price of an index at say 1000 points for a month expiration would be 1015. Or 1000 x 1.015. This would represent fair value.

If the DOW or S&P were trading at a premium at close, arbitragers would come in at open in New York and buy shares whilst selling futures in Chicago.

This would all be done by bots and quant algos now I guess.

 

[explod]

On the daily chart we have a reversal. My take from technical is that gold will work up from here. A close on the daily of $US980 is required for an asault on the March high.

An appearance of US dollar weakness overnight if confirmed tonight will be interesting.

 

[Sakk]

Good 'spot' Sakk. Out of interest, you don't wait for confirmation by the following candle for these shooting star and hammer reversals? I find it one of the most crucial elements. Of course, you miss a small part of the profits, but quite a number of these hammer reversals can fizz out if there is not follow on confirmation.

No. I go on the reversal signal. Waiting on confirmation, leads to greater drawdowns for my system.

I have a high rate of breakeven trades and if I wait for a confirmation candle, these breakeven trades would turn into -0.5R to -1R losses causing larger and more frequent drawdowns.

What I've found, and this is only from my observation and trading results, is that once a bottom reversal candle is confirmed, you either get immediate upward price movement typically allowing you to move to breakeven in a day or two or two to three days sideways movement which allows you to move to breakeven or exit with a very small loss.....usually within -0.5R

It's kind of like a spring, the price rejects the lows and bounces up, depending on the force it will either continue, slow down over a few bars and continue falling or ocassionally reverses violently.

Just to add, laziness leading to breaking your own trading rules,
almost always leads to missed opportunities and losing money.

In the GG trade above I took the signal without checking one of my rules, which is " Don't take a trade if earnings is to be announced within 10 trading days" Well.......earnings was released the next day ....looks like I'll be stopped out.

An interesting thread starter could be on When has laziness cost/made or saved you $$ ........or your rear