Gold Price - Where is it heading?

[Cooks]

The daily chart hasn't even breached the last Lower Low yet and is yet to make a Higher High.

Needs to break $930 to get bullish.

Looking at your chart, the last pivot low was at around $800, so we are no where close to it... but we have made a higher high by passing $885. So starting from $670, we clearly have an uptrend of higher lows and higher highs.. a good consolidation / pullback under $930 should see more upside

 

[Uncle Festivus]

I'm no T/A guru, far from it, but a little voice in the back of my head keeps saying "gaps get filled" and on a long term AUD gold price chart there's a very noticeable gap around $1000.

I can follow all the fundamental arguments, but the chart in AUD has me thinking that maybe there's a dip coming and that would be a better time to add to positions? Or have I got it all wrong? I'm no chart expert as I said.

$AU1000 gold would need either a fall in the US price to $650 or so or exchange rate back into the 80's or so or a combo of both. Aussie interest rate cuts and a full blown recession sort of limit the FX factor, so the other option of an outright tank of the US price is the only other variable, but then that's not going to happen because of........

This from Money & Markets if true should push Gold up???
But just to give you a sense of the magnitude of the problem, Bank of America and Citigroup's combined credit default swaps are more than sixty times larger than the $90 billion they've received so far in capital infusions from the Treasury Department.

Wealth destruction via asset value vaporisation. Fractional reserve banking and derivatives of the money created ensures that all such money created will be destroyed in circumstances we now face ie once the ball starts rolling it will be impossible to stop.

[FONT=Arial, Helvetica, sans-serif]AMERICANS are bracing for more bad news this week, when data will probably show that the US economy shrank by an annualised 5 to 5.5 per cent in the last three months of 2008, the biggest contraction in decades. [/FONT]

My conservative prediction - $US1000 $AU2000 gold by at least August 09, gold equities to be ahead of the gold price by several multiples?

 

[sinner]

Good morning everyone, I only woke up an hour ago!

The Reuters Precious Metals Survey 2009 results are out:

http://www.safehaven.com/article-12435.htm

Interesting to see those with the lowest forecast for gold are the banks in the news most frequently for being in financial trouble!

 

[explod]

Good morning everyone, I only woke up an hour ago!

The Reuters Precious Metals Survey 2009 results are out:

Gold does not pay interest and marginal on fees.

Banks also make their money from issuing/creating debt and gold has no debt.

 

[BentRod]

Looking at your chart, the last pivot low was at around $800, so we are no where close to it... but we have made a higher high by passing $885. So starting from $670, we clearly have an uptrend of higher lows and higher highs.. a good consolidation / pullback under $930 should see more upside

Sorry, I mean Lower High not LL.

We are still yet to breach the last Lower High, real HH's are yet to be made.

Interested to see how it goes tonight.

 

[Cooks]

Sorry, I mean Lower High not LL.

We are still yet to breach the last Lower High, real HH's are yet to be made.

Interested to see how it goes tonight.

I see what you mean

using pivot and time analysis, we should clear that level soon.. but I can be wrong

 

[explod]

In my opinion they probably can't stop the trend reversal now, they will be
"exporting deflation" for a long time to come, and this will mean a strong USD whether they like it or not.

Disagreed with you sinner but thought I would let the news talk.

By Pham-Duy Nguyen

Jan. 26 (Bloomberg) -- Gold rose to the highest closing price in almost five months in New York on speculation that government spending will spur inflation, boosting demand for the precious metal as a hedge. Silver also gained.

The waning interest in US T bonds (no yield and the growing debt making them look risky going forward) is making the $US dollar look very dodgy too.

 

[Page]

Gold prices in India have crossed 14000 people still not assure were these precious metals going to stop. The gold business in India has been affected middle class people are not capable to purchase this precious metal at this rate. The position of Gold in international market is also not good and people waiting for a deep in Gold.

 

[sinner]

Disagreed with you sinner but thought I would let the news talk.

The waning interest in US T bonds (no yield and the growing debt making them look risky going forward) is making the $US dollar look very dodgy too.

Hi explod, can you qualify "waning interest in US T bonds"? As you point out, there are no yields. This signifies massive demand in treasuries. 13-week treasuries yield are almost nothing, cannot even break up to 0.15%! Yields are still at all time lows on all treasury instruments, this indicates all time high demand!

We are seeing some small easing of prices and bounce back on yields on the 5y, 10y and 30y but nothing significant yet! Would need to see yields move strongly above 1.75-2% on the 5y for me to agree.

I think this will only happen if China or Japan significantly reduces or stops buying treasuries. At this point, I don't see it happening.

By Pham-Duy Nguyen

Jan. 26 (Bloomberg) -- Gold rose to the highest closing price in almost five months in New York on speculation that government spending will spur inflation, boosting demand for the precious metal as a hedge. Silver also gained.

Unfortunately, I can't agree with Mr Nguyens story. This is the same set of "investors" who they claim are rushing to safety when T-bond yields go down, but we all know this is due to massive demand from financials and banks parking Fed Fund Rate (ZIRP) and TARP money in treasuries for a 2% carry trade. Just as I don't feel every price rise in gold is investors speculating on inflation, even though this is always how it is reported by the talking heads.

My guess is the recent price rise is due to several countries losing their currencies purchasing power (India is a good example as Page mentioned, I hear gold demand is high in Russia also) and switching capital to something with more perceived safety. i.e. good old increased demand.

 

[doctorj]

Citi's view on gold

 

[sinner]

Great read doctorj, I remember someone posting a Privateer note here saying Citi was bullish on gold and now we have the actual info, three cheers for you!

Some very nice commentary and charts in the read, worthwhile I think for everyone regardless of their gold investment status. It examines gold in a very similar way to my own ideas and feelings (long term picture of gold: oil, gold:T-bills, gold:dow, although they use gold:sp500) and makes a few points I definitely agree with along the lines of a move up in oil, move up in USD, no USD:gold correlation, etc.

Thanks again. On the sidelines once more today, spending my time researchin rural NSW property market! Some real nice cheapies coming on for sale.

 

[Ageo]

Well if the comex price should follow the physical then perhaps we will see a push to $2000AU p/o as bullion houses around the world cannot keep up with demand. I was with a customer the other day when a gentleman walked right in and asked for $400,000 worth of bullion.

Anything less than 1100AU p/o is considered a bargain now in the physical world. (Even if it tanks like it did back in October).

 

[explod]

Well if the comex price should follow the physical then perhaps we will see a push to $2000AU p/o as bullion houses around the world cannot keep up with demand. I was with a customer the other day when a gentleman walked right in and asked for $400,000 worth of bullion.

Anything less than 1100AU p/o is considered a bargain now in the physical world. (Even if it tanks like it did back in October).

Aparently the Comex is mixing it with longs to be on the safe side. It was the banks who entered the market around the $US920 , according to Dan Di Nachi that technical level will be the one to toss. A drop to 870 could see the Comex mob have another go at the 840 area.

Through this entire bull run from 2001 the breaks have occurred out of pennants, this one has about three months to run before it has to makes its decision.

 

[Page]

There are very few possibilities that we can see any down trend in gold. In future we are not seeing gold coming down possibilities are very less.

 

[sinner]

Hi guys,

If nobody minds I'd like to revisit the USDJPY <-> GLD correlation which amory raised.

This is the 5 day chart. I included XAU, GLD and GOLD.AX to try and cover the correlation for full 24h of trading in terms of gold ETFs and spot price.

A bit messy and all over the shop.

Now examine the second chart. Anyone notice anything? USDJPY seems to be a high correlation leading indicator to GLD! Every time USD weakens against JPY you can see an almost identical movement in GLD while the NYSE is open.

Please note:
1. I use GLD rather than XAU on the second chart to highlight how the USDJPY leads the NY trading session gold price (and GLD tracks spot pretty consistently).
2. Five days of interesting but untested chart does not constitute statistical significance, only that the correlation could be examined further (and with more rigor!). I can post an updated chart tomorrow after tonights session, if anyone is interested.

Comments appreciated.

 

[explod]

Gold attracts more flows amid recession
Wed Jan 28, 2009 9:29am GMT
By Frank Tang and Jennifer Ablan

NEW YORK (Reuters) - Gold, the traditional safe haven in times of economic turmoil, proved to be more a commodity that everyone loved to hate last year even amid the turbulence that engulfed world markets.

But as 2009 gets under way the yellow metal has found huge traction with money managers.

In the last eight sessions, gold has rallied as much as $100 (70 pounds) an ounce to hit a near four-month high of $915.30 on Monday ”” in spite of a rising dollar.

The furious rally in the bullion stems from expectations that the U.S. government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.

Against this backdrop, investors are largely shunning everything from U.S. Treasuries to stocks, which are down 10 percent and 7.5 percent so far this year, respectively, while pouring cash into gold.

"I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded," said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey.

For you Sinner, it is obvious that the so called popularity of treasuries is coming from the Fed and as well with China and Japan trying to hold up their investment in them and to vainly maintain trade for their produce. One commentator recently stated that those holding Treasuries are standing on a trap door. As more money is printed the value dilutes.

Gold may not pay interest but at least among virtually all other things, it is going up.

 

[explod]

The Bond market is the one to watch now. Privateer last few newsletters have covered the dynamic in considerable detail. The following short bit from Dan Norcini sumes it up prettty well. The day for gold is getting closer and the move will be strong. On the weekly we are near to a breakout of significance IMHO

Even the bond market has finally figured this one out – as lousy as the economic data gets (did you see that new home sales hit a 14 year low according to today’s data release) the bonds still cannot muster much of an upward move. Traders there are slowly coming to realize that bonds are not such a “safe haven” when the feds are multiplying them faster than ACORN can register non-existent or dead voters. Bond traders rightly fear a tidal wave of supply that is going to overwhelm whatever demand still exists for them.

The bond chart has turned absolutely horrendous with today’s sell off breaching a short term support level which had emerged near the 128 ^15 level. There looks to be nothing in the way of technical chart support until down near the 100 day moving average at 125 ^08. About the only thing that the bond bulls have going for them is the extremely oversold level but that is not a lot to hang your hat on once sentiment shifts, especially in a market that had blown up into a bubble of cosmic proportions. Tomorrow’s weekly and monthly close in the bonds will be significant.

All of this contributed to gold’s rise from support – if bonds are no longer safe havens then where can one go with their wealth to protect it from the depredations being inflicted upon it by Central Bankers and ignorant politicians. Answer - Gold. Pause here as the camera pans in closer to zoom in on the bullions coins I am holding in my hand and then pans back out so that you can see the 800 telephone number to phone so that you can purchase some gold and pay for the cost of the advertisement.

Some may consider this to be a Gold Bugs Ramp. It is, but only my VERY humble opinion and have been often wrong in the past.

 

[sinner]

The Bond market is the one to watch now.

We can at least agree this far

I don't disagree that China, Japan and the US Fed are largely behind demand for T-bills. What we are witnessing is what the Chinese call "triangular debt" where several parties conspire to give the illusion of assets based on debt.

I simply don't see it ending all that quickly like a trap door.

Here is an analysis of the China T-bill situation which I found really great. The first link is a blog overviewing the piece which I have included because some of the comments down the bottom written by some smart cookies! Not necessarily in agreement with my view but very educational. The second link is the actual piece

http://blogs.cfr.org/setser/2009/01...agement-of-chinas-reserves-during-the-crisis/

http://online.wsj.com/article/SB123318934318826787.html

Anyway, anyway, that isn't why I am posting here tonight.

With the London session well underway, and NYMEX opening pretty soon here is some interesting action:

 

[explod]

It looks like the close this week will be around $US925, a little short of what I would see as significant but momentum is growing now at the right time for the new trading year. Of course the sign we have been looking for is SENTIMENT

Posted: Jan 30 2009 By: Dan Norcini Post Edited: January 30, 2009 at 3:47 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

Gold buying accelerated as Europe opened for trading in the overnight hours here in the States with the currency crisis the main factor propelling European based gold prices sharply higher. Paper is definitely OUT in Europe and metal is in. I suppose what is so revealing about this is that is marks an abrupt reversal from a pattern that has been seen for most of the better part of the entire near-9 year bull market in gold. Asian buying would take the metal higher whereupon the return of Europe based traders to their desks, it would be summarily derailed around the 2:00 AM CST period. What is happening now is that the price is accelerating higher near or about this hour. It has become obvious that a sea-change in sentiment towards the yellow metal has occurred in Europe and particularly in Britain. With no where to put money for a safe haven as bonds become suspect, gold is seeing significant hedge fund activity which is beating back the incessant selling by the bullion banks. That buying drove Gold priced in Euro terms to another brand new, all-time high for the London PM Fix at €715.620. Euro gold has taken out €700, quite a significant feat! So much for the deflationists’ arguments…

Once trade moved into New York, the bullion banks resurfaced in force and attempt to stem the tide. Today they initially showed their hand near and above the $920 level. Their footprint is more than obvious for those who can read price charts. However, in what must have been quite a stunner to these bullies of the sand box, they were beaten back out of their castle as the bulls pushed right through their picket lines. They have been feverishly attempting to stem the rise near $920 as failure means the highs made back in September-October last year around the $940 level would then be in play. If those give way, $1000 is a given and they know it.

 

[cuttlefish]

Gold price up nicely overnight, and even John Nadler is starting to sound vaguely optimistic (or at least less pessimistic).