Gold Price - Where is it heading?

[Edwood]

here's a take on the nearer term - expecting we'll follow the channel on upwards now

 

[Edwood]

decent reaction at the median line, would like to see us back to 1105 for starters

 

[Edwood]

nice drop off there, closed shorts manually at 1106

 

[SeM0s]

Gold - February 21, 2010

Summary

Long term outlook: Up
Medium Term Outlook: Down
Short Term Outlook: Sideways to Up
Revision Point: Break above 1260
Potential Medium Term Targets: 680 and lower
Preferred Strategy: Take short term positions only, till we see an end of the corrective phase.
The price action during the last week invalidated our preferred count and raised our previously alternative count to the preferred status.

With a possible wave 1 at the December 22, ’09 low (1074.90), followed by wave A.2 at the January 11, ’10 high (1161.75), wave B.2 at the February 5, ’10 low, we are now in the making of a five wave advance to complete wave C.2. As per this scenario, our target for the completion of wave 2 will be above the January11, ’10 high at 1161 and close to the 1185 to the 1190 level, but keeping below the December 3, ’10 highs at 1126.30). However, given our current outlook, we will expect a downward move at the completion of wave 2 to make lows below the February 5’10 low.

As a current alternative, we have a completed wave 2 at the January 11, ’10 high (1161.75) followed by wave I.3 at the January 28, ’10 low, followed by a.II at the February 3, ’10 high (1125.10), wave b.II at the February 5, ’10 low and now forming wave c.II to complete wave II.3. As per this alternative scenario, we would expect wave c.II to terminate at around the 1137 level, from where the downward move can be expected to resume

 

[explod]

Big news the other day that "China was not interested in IMF gold" the price then dropped. he he, today the following:

The International Monetary Fund (IMF) said it had no comment on a rumor that China is the buyer of the remaining 191.3 tons of gold the IMF is selling.

Alistair Thomson of the IMF's Press Office told Kitco.com that the agency does not comment on speculative stories, calling this a "sensitive area" of discussion.

The unconfirmed rumor was based on Russian news reports and some sources said it boosted gold futures prices.

In his daily commentary, Jon Nadler, Senior Analyst for Kitco Metals Inc. wrote, “According to the Russian FinMarket news Agency, Chinese officials have confirmed the intention for China to buy the remaining 191.3 tones of IMF gold that are still for sale. The rumors have however not yet been confirmed. “

The IMF announced the sale of its remaining 191.3 tons to the open market in mid-February. Reportedly the IMF couldn't sell its gold to central banks like China and India, traditional big buyers, so it had to resort to the open market.

In September 2009, the IMF announced an intention to sell 403.3 tons of gold; India, Mauritius and Sri Lanka purchased close to 212 tons by the end of the year.

Today from Dan Norcini per JSMineset:

Posted: Feb 25 2010 By: Dan Norcini Post Edited: February 25, 2010 at 2:07 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

You have to be really impressed by gold’s performance today. It had three, no, make that four, strikes against it. First, the equity markets dropped sharply. Second, bonds ran strongly higher in a flight to safety. Thirdly, the Dollar was marginally higher. Fourthly, crude oil dropped nearly $3.00 barrel while copper was hit hard. In other words, all of the usual deflation trades were back on today with investors/traders moving towards the risk aversion plays. Yet, gold refused to break down and around mid morning began climbing back into positive territory. At the same time, the mining shares also moved well of their lows helping to further confirm the strength at the Comex. As the session wore on, gold gained more upside momentum closing the pit session trade just off its best level of the day.

The price action in gold indicates that it is trading on its own merits for at least today and acting like the proverbial safe haven that it has always been historically. The fund algorithms have seriously distorted this role recently because those computer generated trades just jettison nearly everything in sight when their set of various inputs signal sells. The notion that gold is a “risky” asset that should get sold during such times when risk is being avoided contradicts history yet that is exactly what has tended to occur with the metal particularly when equities were being sold off. Remember, these computer generated trades are just that, “computer generated”. As such they are generally not selective but are rather quite indiscriminate as there is no human thinking or analysis involved. All that these infernal things are designed to do is to front run other orders coming in or jam prices higher or lower in the pursuit of ultra short term profits. That is what makes today’s move higher in gold so telling. Someone is buying in sufficient size to absorb any algorithm selling along with the usual bullion bank price capping efforts.

That brings me to the Dollar – it continues to gain at the expense of the Euro, the Swiss Franc, and the British Pound (read that as Europe land) as it is winning by default rather than any bullish scenario. Even at that, I keep mentioning its deteriorating price chart. The bearish divergence continues to show itself and momentum is waning but the bears just cannot seem to break it down technically. We will need to watch the 80 level on the USDX to see if the shorts can knock it below there. If so, they have a legitimate shot at taking it down to 79.75 where a large number of technical sell stop orders are waiting. With the kind of strength gold has been demonstrating by its refusal to break down, a technical sell off in the Dollar should easily allow gold to break through the barrier erected at $1,130. We will have to wait and see how things develop.

I mentioned yesterday that the bulls in the mining sector need to hold the line near the 390 level in the HUI to prevent a move down towards the 375 level. They are digging in admirably this morning but will still need to push the shares high enough to move the index back above the 405 level to generate increased nervousness among the shorts, who have got to be disappointed that they could not build on yesterday’s downside momentum. They were certainly running to cover this morning once price took out yesterday’s high. Support in the HUI lies at today’s low near 380 with stronger support at 375.

The long bond is back above the major moving averages climbing above the resistance barrier corresponding to the 20 day moving average having flipped the technical indicators back to the buy side. We will need to see how they act the next few sessions to see if they too are ranging. As you can probably tell by now, there are not a lot of these major markets that are trending right now in the short term but are rather bouncing back and forth in a range trade as players try to figure out what is next (inflation or deflation).

 

[explod]

From JSMinset today:

Ignore the IMF sales – Soros is right about gold
By Dominic Frisby Feb 24, 2010

George Soros is a man who has outwitted governments before. In 1992 he made more than $1bn by short-selling sterling, as the UK government was eventually forced to withdraw the pound from the European Exchange Rate Mechanism. So when he speaks, investors listen.

Last month, at the World Economic Forum in Davos, Switzerland, he declared that gold is "the ultimate bubble". Fears were quickly sparked that the precious metal would tumble.

Various writers, fund managers and investors worked themselves into a frenzy. Many jumped ship and within a week we were trading down to levels last seen in October, almost $1,050 an ounce.

But one canny investor, it seems, was buying. George Soros…

A fortnight or so after his "ultimate bubble" quote hit the headlines, it emerges that George Soros has actually more than doubled his investment in gold. He now owns some 6.2 million shares in the US-listed gold exchange traded fund, SPDR Gold Trust (NYSE: GLD), worth some $680m. His investment vehicle Soros Fund Management also increased its holding in the Canadian gold miner Yamana (LSE:YAU) .

 

[SeM0s]

Summary

Long term outlook: Up
Medium Term Outlook: Down
Short Term Outlook: Sideways to Down
Revision Point: Break above 1260
Potential Medium Term Targets: 680 and lower
Preferred Strategy: Take short term positions only, till we see an end of the corrective phase.

The market did not have any surprises during the last week. The price unfolded quite as expected. With a completed wave 2 at the January 11, ’10 high (1161.75) followed by wave I.3 at the January 28, ’10 low, followed by a.II at the February 3, ’10 high (1125.10), wave b.II at the February 5, ’10 low. We are now at or close to the completion of what we expect to be wave c.II. However, there still seems to be a potential for the price reaching close to the 1138 to 1142 mark.

It is also important to keep in mind an alternative interpretation of the move down since December 03, ’09, while planning any potential trades:

With a possible wave 1 at the December 22, ’09 low (1074.90), followed by wave A.2 at the January 11, ’10 high (1161.75), wave B.2 at the February 5, ’10 low (1044.55), we are now in the making of a five wave advance to complete wave C.2. As per this scenario, our target for the completion of wave 2 will be above the January 11, ’10 high at 1161 and close to the 1185 to the 1190 level, but keeping below the December 3, ’10 highs at 1126.30).

 

[Edwood]

here's a take on the nearer term - expecting we'll follow the channel on upwards now

following the script so far

 

[Whiskers]

following the script so far

I'm looking north also, for a new high in the months ahead, maybe well into the 1300's. What is your plan/forcast with the pitch fork, Edwood?

I don't like your big corrective count SeM0s. I cannot even begin to imagine a scenario where the POG could fall back toward 600ish.

I'm thinking the diagonal triangle for wave 'c' and probably '4' was a good sign the near term low is in.

Controversial count I know, but I'm treating the larger count like a diagonal triangle even though 1 and 4 didn't overlap and arguably needed to come withnin 10%... but I'm not certain within 10% of what... anyway, I'm working with what I feel is Elliotts original philisophy, a combination of FA and psychology to help my count rather than any strict later day interpretation of the rules that automated systems/analysis, that weren't so prolific in Elliotts day, may corrupt a little.

 

[Edwood]

hi Whiskers - your count looks fair to me - I reckon from here a visit to the upper parallel is on the cards and then on to new highs

 

[So_Cynical]

A couple of weeks ago the world Gold council released there full year 2009 'Gold demand trends' publication....makes for interesting reading.

• The volume of total identifiable gold demand during 2009 was down 11% on 2008 levels at 3,385.8 tonnes.
• ETF demand in 2009, at 594.7 tonnes, was 85% higher than in 2008.
• Gold supply in 2009 was up 11% on the levels of 2008. The single biggest contributor was recycling activity.

Total gold supply during the year was up 11% on 2008 levels. As shown in the graph below, a significant rise in the supply of recycled gold and a modest rise in mine supply were partly offset by lower levels of producer dehedging and significantly lower official sector sales. It therefore appears that supply had a negative impact on the gold price during 2009. However, this annual analysis misses one crucial point - supply spiked higher in the first quarter, but dropped very sharply over the following two quarters. Despite a modest rise in the final quarter, total supply in Q4 was 27% below the levels of Q1.

http://www.gold.org/assets/file/pub_archive/pdf/GDT_Q4_2009.pdf
~

 

[explod]

Well the twixt of the tounge is certainly no worries to our friend Jon Nadler from Kitco. Could not resist posting up the following little excerpt from todays letter to Kitcoenons (a 61% retracement, indeed:-

The yellow metal –according to technical analysts at Commerzbank – might rise towards the $1150 to $1162.00 level if it manages sustained closings above previous resistance at $1135.50 an ounce. The $1150 number represents a 61.8% retracement from December’s $1226 high, and it is of interest to those who are Fibonacci sequence followers, while the $1162 figure harks back to gold’s January high.

 

[sinner]

I have not traded spot gold since $1050 was reached, as mentioned multiple times something is brewing and it is not "the move".

Last night we reached and breached the 1136/7 level which was my previous level of interest.

Still unsure now of what the next move will look like, even despite last nights performance.

If you put a gun to my head and demanded my opinion, I would opine something along the lines of a low volume re-test of demand around $1050, from which a better analysis can be produced. If I was to be completely wrong and POG went straight up in a straight line to $5000 from here I wouldn't buy it, same as I didn't buy the original "too hard too fast" rally to the 1000 zone.

China has been making plenty of noise about commodities being overvalued - even on the wire today I saw "China says price of commodities outstripping global recovery" or something like that.

All this conjecture, has of course, nothing to do with the accumulation of physical gold and silver, which I continue to do at the rate my trading P/L and normal productivity allows - roughly 10% of every green $ goes into PMs.

 

[SeM0s]

Gold - March 07, 2010

Summary

Long term outlook: Up
Medium Term Outlook: Down
Short Term Outlook: Sideways to Down
Revision Point: Break above 1260
Potential Medium Term Targets: 680 and lower
Preferred Strategy: Take short term positions only, till we see an end of the corrective phase.

There is no change in the situation, as it appeared at the time of our last report. Both the alternatives presented in our last report are still valid. We present our current report with updated images and reproducing the relevant parts of the last report:

With a completed wave 2 at the January 11, ’10 high (1161.75) followed by wave I.3 at the January 28, ’10 low, followed by a.II at the February 3, ’10 high (1125.10), wave b.II at the February 5, ’10 low. We are now at or close to the completion of what we expect to be wave c.II. However, there still seems to be a potential for the price reaching close to the 1138 to 1142 mark.

It is also important to keep in mind an alternative interpretation of the move down since December 03, ’09, while planning any potential trades (as presented in the second image):

With a possible wave 1 at the December 22, ’09 low (1074.90), followed by wave A.2 at the January 11, ’10 high (1161.75), wave B.2 at the February 5, ’10 low (1044.55), we are now in the making of a five wave advance to complete wave C.2. As per this scenario, our target for the completion of wave 2 will be above the January 11, ’10 high at 1161 and close to the 1185 to the 1190 level, but keeping below the December 3, ’10 highs at 1126.30).

 

[sinner]

So, what you're saying sem0s (admittedly in a very fancy way) is ...that we could go down from here...and if we don't then we will go up from here?

I better add that to my trading plan...

 

[Trembling Hand]

So, what you're saying sem0s (admittedly in a very fancy way) is ...that we could go down from here...and if we don't then we will go up from here?

I better add that to my trading plan...

No No. What he is really saying is that if you sign up for his trading signals you will make a packet of money through his superior trading calls. Of course you will never see him actually making a trade let alone a decent sample of 20 -100 of them. Makes you wounder hey? How helpful is all this labeling and drawing of lines in actual trading.

 

[Trembling Hand]

Just on golds swings and round-a-bouts.

Are we seeing some under performance here. Oil, risk currencies, equities etc have all kicked up the last two days yet gold been going down the last 4.

Interesting.

 

[sinner]

Just on golds swings and round-a-bouts.

Are we seeing some under performance here. Oil, risk currencies, equities etc have all kicked up the last two days yet gold been going down the last 4.

Interesting.

The last 6 months has been awash with "risk arb" opportunities of every sort as normal market correlations keep breaking and re-establishing themselves everytime another part of the economy craps out and then bailed out.

My current fav is long EURJPY short ES (longterm), but recently closed a long April crude short EURUSD (shortterm) play did pretty well also. I have even been seeing intraday plays of short Asia indices/long Europe indices and vice versa from the Sydney interbank open on a few days since Feb of this year.

 

[Edwood]

one for the physical bugs. interesting read, reckon he must be long tho

http://www.zerohedge.com/article/its-going-implode-buy-physical-gold-now

 

[explod]

one for the physical bugs. interesting read, reckon he must be long tho

http://www.zerohedge.com/article/its-going-implode-buy-physical-gold-now

Thanks for that link Edwood, a good read. These effects must flow on to all currencies not backed by gold, and that is all currencies. Anyone interested in maintaining value in the overall equity of thier portfolio ought to have a good read via this link, IMHO

Many of us who have followed this thread over the years are not surprised and are well prepared.