Gold Price - Where is it heading?

[explod]

It was great to meet Explod and his Missus this week. We went to Dalia's in Dromana and drank lattes, long blacks etc.. until the cows came home (Great coffee by the way) discussing the precious metals market. Wonderful to meet up with a fellow ASFer in person. Had a great yak and confirmed everything the thread entails thus far. Cheers explod, you're a top bloke.

Likewise Gumby and you could take the learner bit out too, your experience, being first an Aussie, but from living in the Asia region over the last few years adds an extra omph to your inputs. A month or so back we entertained Roysolder from New Zealand for a few days and find it is very good putting the human touch to the cyberspace. Waaay off topic, but the wide perspectives helps to confirm our understanding of the financials and in turn the reasons why gold continues and will continue to gain strength.

And by the action over the last few days and as business gets back to normal trading I believe your US$gold price of 1250 will be hit sooner than many believe. On every turn the thick veil of lies covering the real and dreadful state of the US, and indeed of most economies, is becoming blatantly obvious.

 

[sinner]

My weekly chart posted in the previous page still in play. We did not test yet!

Daily is setting up for a fall. Since the market opened on Jan 4 I have been buying all my signals in the 1098-1118 region. Have already cashed out a lot of that into the spike on todays Tokyo open. Has anyone noticed every time Tokyo takes a holiday that gold spikes hard? Can anyone explain this phenomenon?

Tomorrows London session will be the important one to watch. If we can stay above 1119.70 all will be well for longs for a few days yet. Else watch the hell out.

The previous and proceeding posts are all trading analysis by myself, for myself - posted here for the benefit of other traders to share their thoughts and experience. Please do not follow my calls. Please do not interpret my calls as financial advice.

 

[explod]

Sinner

Daily is setting up for a fall.


The previous and proceeding posts are all trading analysis by myself, for myself - posted here for the benefit of other traders to share their thoughts and experience. Please do not follow my calls. Please do not interpret my calls as financial advice.

A bit miffed at your signals Sinner and the gold price seems to be going in the opposite direction to your indicators. I suppose more clarification may take it off topic. Perhaps you could start the "Sinner's gold trading thread" where we can give greater attention to your issues.

 

[Edwood]

pretty solid move o/n there Sinner, could be the lower high we needed to see to get some traction going

 

[sinner]

A bit miffed at your signals Sinner and the gold price seems to be going in the opposite direction to your indicators. I suppose more clarification may take it off topic. Perhaps you could start the "Sinner's gold trading thread" where we can give greater attention to your issues.

Why exactly are you "miffed" and what at, I don't understand? At my "signals" which I expressly stated were my own analysis and NOT signals, posted for others to share their thoughts (which nobody did). What indicators? A red line is an indicator now?

In any case, I took the H4 trendline break last night during London around the 1151 area to good effect, woke up to see New York had dropped her down at 1128.

 

[Edwood]

gold looking like it will head down to the 1080 level again in the near future. (not sure of timeframe, but probably by mid-Feb )

 

[brerwallabi]

yeh yeh timeframe short term you mean and then tell us the rest, back up to US$1250 time frame mid March?????
Gold is getting very predictable your 1080 could be on the cards but whats after that it must go up if you think its going to hit and not fall below 1080

 

[Edwood]

hi brerwallabi - sure short term is what I'm interested in, not holding something like gold long term, get a lot more from it by trading the moves in my experience.
yes if 1080 can hold then higher is possible. higher from here is also possible, but appears its going to retest 1080 first. if 1080 can't hold then 1020 comes into focus.
all possibilities mind, nothing is guaranteed (including higher prices long term)
cheers

 

[Edwood]

nice breakdown of the h&s neckline over night

 

[Sean K]

nice breakdown of the h&s neckline over night

Might get your 1080..

 

[Edwood]

Might get your 1080..

yep shaping up - some form of retest of the neckline would be nice to load up some more

 

[Out Too Soon]

yep shaping up - some form of retest of the neckline would be nice to load up some more

So that's why LGL & CXC & I imagine others sp are making like skydivers at the moment. Is this a good buying opportunity coming up or has Gold lost it's luster?

 

[Edwood]

So that's why LGL & CXC & I imagine others sp are making like skydivers at the moment. Is this a good buying opportunity coming up or has Gold lost it's luster?

depends on your timeframe as always - I am long now from 1092.6 with stop at even but only looking for a $10 move
If we go through 1070 the shine will be off a bit I would think? But its early days

 

[Edwood]

depends on your timeframe as always - I am long now from 1092.6 with stop at even but only looking for a $10 move
If we go through 1070 the shine will be off a bit I would think? But its early days

closed for 34 pts - time for a beer

 

[skyQuake]

closed for 34 pts - time for a beer

34pts of beer? Thats alotta beer

Goldies have all recovered well off the lows so they're anticipating a rebound of sorts tonight.

Cheers

 

[Edwood]

ha ha SkyQuake - gawd no, 3 or 4 pints would sew me up

 

[Edwood]

looks to be probing the bottom (so to speak) - long again, 1086, stop at even

 

[sinner]

I am getting less and less convinced that this current move is "the move" in gold.

Still waiting for market to show its hand - what's happening now is certainly tradeable but looks to be a setup for something very big. Direction unknown. Makes me nervous. Accumulate physical PMs as a hedge on any shorts and trade small lot size.

My market positions and charts remain unchanged - until 1137 is breached I am holding shorts from just under 1151 happily locked in some profits. Still waiting to see the trendline test.

Talk on the wire this week of China+India bids waiting on the interbank market at 1050. We might see other banks retract their bids to get those orders filled (this seemed to have happened in EURUSD this last week!). Just as I offloaded longs into Tokyo weakness earlier this month - I will offload shorts into China strength as it comes around. For me this is a prudent strategy.

Looking at lower timeframe charts - seem some heavy demand was fed in around the London close. Could have been LIFFE traders exiting their short positions ahead of the weekend or strong demand for gold into the 1600GMT fix. I am also looking at 1075.8 as a possible bear trap where retail goes short and CBs go long to smash the market out - so be careful around this area!

 

[explod]

Posted: Jan 27 2010 By: Dan Norcini Post Edited: January 27, 2010 at 2:55 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

The December US new home sales number released this morning tripped up the equity markets and brought further buying into the long bond with risk aversion trades the play of the day. Analysts ( I sure wish I could grow up to become one of those!) were expecting sales to climb 2.8% when they actually were reported dropping 7.6% from November 2009. That was once again enough to send money pouring back into the Japanese Yen and to a certain extent, the US Dollar with the result that most commodities were hit by another wave of selling as Managed Money continues to liquidate long positions and some hedgies play the short side.

Gold was up overnight but the home sales number unnerved would-be longs out of fear of further long liquidation by the fickle, short-term oriented crowd allowing bears to shove prices lower. However, the same buyer/buyers of size appeared near session lows and were able to push it up off its worst levels midway through the session. Later on, a wave of fresh selling appeared which overwhelmed their valiant effort to move price higher. So far this buying is coming in any time gold dips below $1100. As I said yesterday, it remains to be seen whether they are large enough to eat into the Managed Money and Hedge Fund algorithm-based selling. The longer gold can hold above support layered between $1080 – $1100, the better the chance of it forging a trading range within a period of consolidation. I want to continually remind the readers that both China and India will become active (if they are not already) on setbacks in the price of gold as their long term strategy of acquiring gold for their reserves is precisely that, “long –term”. They are not momentum buyers but value buyers ( yes, some of them still actually exist in this world of hedge fund idiots). As such, they will look to make their purchases into any waves of speculative long liquidation that might occur. Value buyers show up during period of price weakness (where have you heard that before?)

I am still watching the long bond very closely for signs of any potential upside breakout as that would be the clearest signal to me that this market has voted on an “L” shaped “recovery” (I use the word ‘recovery’ very loosely here because there can be no ‘recovery’ without job creation but that is the favorite buzz phrase for MOPE these days) or worse, another leg down in the economy. A “V” shaped recovery would see the long bond dropping sharply and taking out levels last seen in December of 2009. So far the bonds are having trouble getting through the 118^25 – 119^00 level as sellers are appearing there in size so the jury is still out as to what this market is going to do. Suffice it to say the tendency of late has been for higher prices and lower long term rates. Even on the short end of the curve, the market is saying that the chances of any interest rate hike are basically ZERO. No one in the interest rate markets believes any of the BS coming from those yakking about the Fed moving to sop up excess liquidity. As if they needed any further convincing, today’s home sales number is evidence just how sick the real estate markets remain. Even with the feds throwing around taxpayer money to prop up sales, it just ain’t working. People without jobs do not buy houses. It is just that simple. For that matter they may not be buying many Toyotas either judging by the recalls. Ouch.

One further note on the bonds – supply issues are perhaps the only thing keeping this market from moving much higher for now. Traders are still looking at massive, and I do mean ‘massive’ amounts of bond sales, to finance the spending orgy by the current administration and its pals in the Congress. Any talk about “spending freezes” amounts to a snowball in hell since the amount being discussed is miniscule compared to the overall federal liabilities that are being generated. The current rate of spending guarantees an unsustainable increase in interest payments alone within the next 5 – 7 years. Throw into this hellish mix the pitiful fiscal condition of many of the US States, and the only way this sort of witches brew of fiscal poison can ever hope to be dealt with is through a Dollar devaluation.

While the Dollar was higher today due to risk averse trades, it still appears to be having trouble with the 79 level on the USDX chart. Momentum indicators are positive but momentum is also waning. Bulls will have to push price past that level in a convincing fashion or we are going to see further selling in the form of stale long liquidation. We will continue to watch its activity for signs of what is coming next.

The gold shares as indicated by the HUI were weak once again today. The technical indicators on the daily chart are approaching oversold levels so that might help put some kind of bottom in them but they have a lot of work to do yet to repair the chart damage that has been inflicted. The weekly chart has the 50 week moving average coming in near the 378 level which corresponds with the 38.2% Fibonacci retracement level of the rally from late 2008 through late 2009. The setback in price is pretty much typical of a bull market in a corrective phase. Price could theoretically move as low as 335 or so without doing any serious long term chart damage but that would certainly not be welcome for the friends of gold.

I should note here that since the week of Christmas 2009, gold has been moving almost in lockstep with the price action of the S&P 500. What that tells me is that hot money flows are ebbing and flowing as risk is either in or out. When equities tank, gold tends to move lower and when equities rise, gold tends to rise with it. That is the signature of Managed Money flows. These flows are automated algorithm trades and are the primary drivers of today’s markets. Without them commodities or currencies cannot generate a sustained move higher. However, in the case of gold, gold is also a safe haven trade and therefore a clash arises between these algorithms based on price momentum and value based buyers of large size who are not momentum oriented. The latter group are the pure fundamentalists who study the larger macroeconomic picture and based on their analysis acquire gold for wealth preservation, and in the case of the increasingly influential far-Eastern Central Banks, for diversification of their massive reserves. To further complicate the price action in gold, we have the usual orchestrated bullion bank price rigging activity to deal with which is always present on rallies.

After the move lower in gold since last week, it will be enlightening to have a look at this coming Friday’s commitment of traders data to give us some insight into just how much of this liquidation type selling was present and how much might be fresh short selling.

 

[Edwood]

we've had a couple of tests of the mid-1070's so far & rejected pretty swiftly each time. Really needs to hold these levels to keep the happy-happy-joy scenario going....