Gold Price - Where is it heading?

[wavepicker]

Looking at a 3 month chart for gold, it seems to show a head & shoulders with the latest drop taking it through the neckline with $580 as a target.

Any thoughts?

Hey dubious,

The peak in Gold was forecast back in April/May this year, see posts 446 and 454. The trajectory price has taken to date was even pinpointed using EW analysis in early June(post # 559). So far has tracked pretty well. Enough said. suffice to say:-

Too all the knockers of EW analysis and EW practioners in general, ie yogi, coyotte, and buyip to name a few, next time do your homework and be a little more opened minded about any methodology before attacking it.
With enough hard work and discipline great things are possible with any methodology. Not jst EW. In the end it's just up to you.

Cheers

 

[noirua]

A very large number of commodities are under pressure. There are a few that may whether the present storm; follow these links and study this sector carefully, as it's a cold wind heading for Australia from the USA: http://www.kitco.com/

http://www.cnbc.com/


http://www.bloomberg.co.uk/avp/avp.htm?clipSRC=LiveBTV#

...and a current video on that Gold price: http://www.cnbc.com/id/15840232?video=161201961&play=1

 

[fleathedog]

Oh dear....

I'm going to have to take very deep breath before looking at my goldies on Monday.

I read that the latest fall was on some heavy volumes so we could see more of the same. My suspicion is that there are enough long termers looking for weakness to hold it above $600. But these things have a habit of feeding on themselves.

Gold definately has legs from here through '07, but TWI USD 80 is turning out to be a mighty stubborn resistance.

I'm not much on TA, so if anyone could explain what the hell a head and shoulders is (with an example if possible) I'd be most appreciative. The only indicator I've found to be consistently useful is RSI, and in terms of the USD and gold they are approaching oversold and overbought territory respectively.

Good luck all!!

 

[noirua]

Oh dear....

I'm going to have to take very deep breath before looking at my goldies on Monday.

I read that the latest fall was on some heavy volumes so we could see more of the same. My suspicion is that there are enough long termers looking for weakness to hold it above $600. But these things have a habit of feeding on themselves.

Gold definately has legs from here through '07, but TWI USD 80 is turning out to be a mighty stubborn resistance.

I'm not much on TA, so if anyone could explain what the hell a head and shoulders is (with an example if possible) I'd be most appreciative. The only indicator I've found to be consistently useful is RSI, and in terms of the USD and gold they are approaching oversold and overbought territory respectively.

Good luck all!!

Hi, I don't know if we're on the right thread for charts, anyway, this link gives fairly basic information most of us can follow: http://www.flexinvest.co.uk/tech-analysis.htm

 

[ducati916]

But 5 days isn't exactly a trend is it?

Granted, 5 months has a similar picture...so are you arguing that gold has broken with inflation, that the POG means less than it used to? Or that the world's economy will soon be a stagnant damp squib in the bear pit?

No it's not, but this same argument has been under discussion since about page 11 of this thread.

Gold is a truely lousy inflation hedge, unless you get the *timing spot on*
But if you had timing that accurate, the whole argument would be irrelevant.
Stocks have proven to be a far superior inflation hedge on a simply buy & hold basis.

If you had great *timing* then they would have decimated gold.
The reason is of course the re-investment of earnings, and the growing capital base provided by stocks, this neat little trick does not exist in gold the physical.

jog on
d998

 

[chops_a_must]

Unemployment data just out, strong wage growth.
Inflationary.
Increased Fed Funds rate?
Gold sells off.

jog on
d998

I found it interesting that even though inflation is looking higher, the stronger USD was enough to pound the gold price. Seems almost counter-intuitive.

 

[YOUNG_TRADER]

I found it interesting that even though inflation is looking higher, the stronger USD was enough to pound the gold price. Seems almost counter-intuitive.

Hence why I gave up on Gold back in June 06

Back then it went Inflation = Lower Gold

Lebanon Israel = Lower Gold

N Korea Nukes = Lower Gold

Butterfly Flaps its wings in Central Park = Higher Gold

So I have accepted that Gold is being manipulated by the powers that be and they will do with it as they like and us mere mortals can only sit back and watch,

I am not that bullish on gold for the simple reason that for gold to rise the USD has to be weaker and there's just to many Trillionaires out there who have a HUGE VESTED INTEREST IN keeping the USD strong at all costs!

 

[vert]

dubiousinfo, i came up with the h&s posibility the other day and it seems to be happening with my target @ 578, i've heard of a 65 week ma that if pog above (bullish) pog below (bearish) and @ the moment its 582. should see if we are on the right track next week.

 

[coyotte]

Hey dubious,

The peak in Gold was forecast back in April/May this year, see posts 446 and 454. The trajectory price has taken to date was even pinpointed using EW analysis in early June(post # 559). So far has tracked pretty well. Enough said. suffice to say:-

Too all the knockers of EW analysis and EW practioners in general, ie yogi, coyotte, and buyip to name a few, next time do your homework and be a little more opened minded about any methodology before attacking it.
With enough hard work and discipline great things are possible with any methodology. Not jst EW. In the end it's just up to you.

Cheers

Hey!
Hang on there Wavepicker

What I was saying and not knocking EW was that basically get 10 EW analysist in a room and you end up with 11 counts --- even you and Nick come up different at times.

But as I have posted in other threads, that it was from YOUR charts on this thread that I decided to join Nick's Service and try to come to terms with EW.

You can't get a better complement than that.

Cheers

 

[Nick Radge]

I think making a comment on 10 EW practioners coming up with 11 opinions is no different to fundamental analysts. A cursory glance at consensus opinion will show the exact same thing, albeit these analysts of formally educated in this stuff.

The other thing I would say is that taking my opinion on Gold and that of Wavepickers may in fact be looking at two completely different time frames. I know my bullish opinion, which I stand by until the count is proven incorrect, is based on daily charts. Perhaps Wavepicker is looking at weeklies or even a much larger count than mine, afterall, EW is a fractal and traces the same patterns out on numerous levels.

The recent advance in Gold unfolded in a 5-wave movement, which means its either a new impulse higher or an impulsive wave-A of a larger corrective move. Either way, the lows set back in early October should NOT be broken and we should at some stage over the coming few months trade above the recent highs. Like any good anaylsis you need to know at what point you are wrong. That level for me is a break below those October lows.

 

[wavepicker]

Hi guys,

Coyotte, thanks for the compliment, but I don't post here for the compliments. I post here to exchange ideas about TA with other traders and like minded people and learn something new. The true of measure of success is about how much $$$ lines your pockets and not whether analysis was right or wrong. Analysis is probably the smallest part of the whole package.

Unfortunately, not enough charts(or variety of methodologies) are posted here. The best work I have seen here is that of Magdoran, who has shown some great examples of precision timing.

Good luck with your EW studies Coyotte. As Nick pointed out, opinions can vary widely by practioners of the same methodology, not just with EW but any method. EW can offer up to 10 different scenarios or even much more at any given time(depending on how many degrees of trend we are talking about). These have to be ranked in order until they are each invalidated by subsequent price movement. That is one of the reasons why different practitioners may come up with different counts. I have managed through my own work in other areas to reduce the number of alternate counts dramatically and thus focus only on the high probability wave counts.


Nick, with the Gold chart, the EW count was done with Weekly bars last April/May. This EW analysis was integrated with my own cycles work. Basically the 8.5 cycle in Gold bottoms in 2008/9, however a cycle bottom does not necessarily coincide with a new price low. As you say Gold may have already seen it's lows and just basically run net sideways until the cycle bottoms. But also, the previous swing high of $650 (which would have invalidated my bearish stance) has not been broken. As such have no reason to change it at present.
Understand 5 wave structure and reasoning with the last move up. Looking at it simply form a daily chart perspective I would say the same thing. Sometimes however what appears a 5 wave structure ends up being a double zigzag. This is one of the limitations of EW. But as you say until the last low is broken that is the best info to work with on the daily chart if using EW as a standalone.

Looking at other markets such as other instruments traded agaist the USD can help us here. For example, in terms of EW the USD Index and the USD traded against a basket of major currencies looks bullish in the near term. Not to mention the broader range of metals (ie which was bearish before this current move in Gold) There are many factors at work here, and simply analysing a host of other markets in themselves help quantify wave counts.


Cheers

 

[Nick Radge]

wavepicker,
Good comments re the other mitigating factors. I should also say that the power of the recent downmove is also cause for concern. On its own merits it appears to be impulsive rather than corrective, however I'll stand by the analysis and keep those October lows as a reference.

BTW, a double zig zag consists of 6-waves. We only have 5 here.

 

[Dr Doom]

It will be an interesting week coming up, as gold bounces around the 'psychological' support level of $600. But I can't see any major fundamental reason for the slump on Friday - the employment figures were up but these statistics are routinely revised down a few weeks later. US manufacturing jobs continue to be lost, service jobs rose. Big deal. Looks like a clear case of gold getting dragged down with the other commodities. The US fed would have to realise that to raise interest rates further would risk converting a deepening housing recession into an outright depression. It (the POG) just might take a bit longer to recover from these levels, but the longer it takes the bigger will be the subsequent retracement to new (record?) highs. Afterall, the number of US dollars in circulation is not reducing.
Also, world gold production is declining, a central bank is 'balancing' it's books by actually buying gold, US deficits are getting worse, then there are the ever present 'geopolitical' tensions.
Only up till now there hasn't been a wall of worry to propel gold higher, every man & his dog has been bullish.
Fundamentals still there

 

[annalivia]

Mid way through 2006, US 10-year bond yields began falling again, after rising from the lows of 2003. I believe this trend could continue into 2007, as the US economy continues to weaken from a housing induced slowdown. If this is the case, the Federal Reserve is also likely to lower the official cash rate.

What has gold got to do with all this? I believe gold will eventually discount the longer term inflationary pressures that lower interest rates will bring about. So if interest rates around the globe do head lower in 2007, in my opinion gold will eventually head much higher as investors seek the safety of 'hard' assets. And the 'hardest' asset is gold.

The prospect of generating sustainable demand by lowering interest rates, in an already indebted global economy, is low. I believe lower US interest rates and weaker economic growth will do major damage to the US dollar this year, thus benefiting its old competitor, gold.

Combine this outlook with a deteriorating picture in the Middle East and we have a recipe for the gold price to hit the US$1000 level by the end of this year.

This forecast may seem unlikely, given gold's performance in the last few weeks of 2006. However, viewed from a longer term context, gold's price action has been constructive. Following the correction from the 2006 highs, gold has been forming a solid base, which is a bullish sign. As a general rule, the bigger the basing pattern, the more powerful the next upward advance.

While gold may continue to move within the recent trading range, I believe the next upward move is inevitable. In summary, I see a slowing US economy in 2007 applying downward pressure on global interest rates. In turn, I believe gold will discount the increased liquidity and paper dollar creation that lower rates will bring, and move substantially higher. The rise is unlikely to be smooth or easy to endure, but I anticipate that it will certainly be rewarding.

 

[wavepicker]

Mid way through 2006, US 10-year bond yields began falling again, after rising from the lows of 2003. I believe this trend could continue into 2007, as the US economy continues to weaken from a housing induced slowdown. If this is the case, the Federal Reserve is also likely to lower the official cash rate.

What has gold got to do with all this? I believe gold will eventually discount the longer term inflationary pressures that lower interest rates will bring about. So if interest rates around the globe do head lower in 2007, in my opinion gold will eventually head much higher as investors seek the safety of 'hard' assets. And the 'hardest' asset is gold.

The prospect of generating sustainable demand by lowering interest rates, in an already indebted global economy, is low. I believe lower US interest rates and weaker economic growth will do major damage to the US dollar this year, thus benefiting its old competitor, gold.

Combine this outlook with a deteriorating picture in the Middle East and we have a recipe for the gold price to hit the US$1000 level by the end of this year.

This forecast may seem unlikely, given gold's performance in the last few weeks of 2006. However, viewed from a longer term context, gold's price action has been constructive. Following the correction from the 2006 highs, gold has been forming a solid base, which is a bullish sign. As a general rule, the bigger the basing pattern, the more powerful the next upward advance.

While gold may continue to move within the recent trading range, I believe the next upward move is inevitable. In summary, I see a slowing US economy in 2007 applying downward pressure on global interest rates. In turn, I believe gold will discount the increased liquidity and paper dollar creation that lower rates will bring, and move substantially higher. The rise is unlikely to be smooth or easy to endure, but I anticipate that it will certainly be rewarding.

Hi annalivia,

Agreed long term gold is bullish.

It's just that for the next 6-12 months it may continue to consolidate or even give up some more ground before moving forward again. That's they way I'm tackling it anyway.

Nick, in so far as double zig zags go(6 wave structure) as opposed to 5 waves in an impulse, fully understand and what you say makes complete sense. However on the daily chart, not all maybe what it appears on the surface. Many, myself included have fallen into this trap before.That's where analysis on the lower timeframes may help give some more clues.
I have seen countertrends on charts that appear to have subdivided into 5's (not breaking any rules) only to be fully retraced.

Cheers

 

[Sean K]

The US fed would have to realise that to raise interest rates further would risk converting a deepening housing recession into an outright depression.

I have this aweful feeling that no matter what happens with interest rates, Americans will just keep borrowing until - kaboom! It's become a deep seeded US (now Western) cultural necessity. To own stuff. And lots of it. Even if you can't aford it!

 

[wayneL]

I have this aweful feeling that no matter what happens with interest rates, Americans will just keep borrowing until - kaboom! It's become a deep seeded US (now Western) cultural necessity. To own stuff. And lots of it. Even if you can't aford it!

Recycled but still apt\/

 

[theasxgorilla]

I have this aweful feeling that no matter what happens with interest rates, Americans will just keep borrowing until - kaboom! It's become a deep seeded US (now Western) cultural necessity. To own stuff. And lots of it. Even if you can't aford it!

I lay blame for this somewhere between the relentless bombardment of media campaigns that compel people to shop and the banks (Fed Reserve included) who are only pleased to see you when you're accepting a credit limit increase or inquiring about a new loan.

 

[Sean K]

I lay blame for this somewhere between the relentless bombardment of media campaigns that compel people to shop and the banks (Fed Reserve included) who are only pleased to see you when you're accepting a credit limit increase or inquiring about a new loan.

Perhaps, but I think these capaigns etc are just cashing in on a basic human psychology. Something about self esteem and survival....Hey, look at my new Boxster - my d!ck must be bigger than yours!

 

[theasxgorilla]

I'll appropriate a quote from Will Smith in the film Happyness...saying to his kid, "If you want something, go get it, period". I've only seen the previews so I don't know the context, but I expect he was explaining to his kid how credit cards work