Gold Price - Where is it heading?

[ducati916]

So here are a couple more charts:





It would appear that you could probably trade a pairs strategy around Gold and [probably] any currency that you chose. Here it is $US.

The correlation is higher between purchasing power [lower chart] than it is to the volume of money [upper chart] which reflects the huge number of variables involved: that would be my guess. One big one, which is hard to track being the carry trade.

So I would be long Gold, short currency, rebalancing over time possibly, rather than just opening closing a number of trades, although I haven't really looked at a way to do this yet.

Probably a far easier way is long Gold and long a Gold Put: which is a trade I hold, given that I appreciate the barbarity.

jog on
duc

 

[rederob]

Gold up AUD$21 and USD$11 overnight, no doubt helped by attacks on 2 oil tankers off Iranian waters.
At AUD$1941 at time of posting, gold in our currency terms is powering into blue sky.
However, in USD terms gold needs another $10 to break long term resistance. That's not immediately apparent, and likely needs some severe consequences from the oil tanker attacks to get the necessary traction.
My bet would be that cool heads will prevail, although there will be lots of chest thumping beforehand.

 

[rederob]

What a day!
More blue skies and a breach of resistance

 

[ducati916]

With a historically high spread between gold/silver, a pairs trade looks attractive.



jog on
duc

 

[Joules MM1]

before pictures ...always superceded by current pictures, wouldnt you say @rederob ?

all that 'chest beating' must have subsided

 

[rederob]

before pictures ...always superceded by current pictures, wouldnt you say @rederob ?

Can't stop time!
POG in AUD closed up $30 while in USD it was less than half that.
It was the strongest upleg I had seen for a very long time, and while US$ POG did not close above resistance, the fact it was breached does bode well.

 

[Joules MM1]

Can't stop time!
POG in AUD closed up $30 while in USD it was less than half that.
It was the strongest upleg I had seen for a very long time, and while US$ POG did not close above resistance, the fact it was breached does bode well.

so not quite 'blue sky' then espesh as it was an outside down day in USD and a screaming sell daily bar in AUD's .....a lot of posts got rush into social media pronouncing the bull is on, but, price is the final arbiter on that one.....

 

[kid hustlr]

Well said J, also with the 'big week coming up in Mkts, expect volatility' long gold here seems too obvious!!

 

[rederob]

Here's the long term picture with contract position points:


And here's the Gold Bugs Index:


The likelihood seems greater for gold breaking upward rather than downward from here.

 

[rederob]

Well said J, also with the 'big week coming up in Mkts, expect volatility' long gold here seems too obvious!!

I was not sure what that really meant, so instead add my views.
Gold has a history of running its own course in the short term, and mulling the tea leaves for inspiration is not going to be productive.
In the longer term the drivers of gold prices are a bit simpler. Gold continues to be a safe haven for big money and, in times of economic (rather than political) "uncertainty" it will attract increased inflows. There is an entirely separate market for "demand" and this is a bit like the weather versus climate argument.
What was interesting about POG is that it continued to rise well after the GFC, and fell steadily through to 2016 as markets got themselves into a semblance of order.
Since 2016 POG has cycled through a series of higher lows, with fleeting breaches of resistance at around US$1350. Holding above that level is the key.
Neither Brexit nor the US/China trade impasse have got POG excited as the "uncertainty" caused by these issues has not had a chance to manifestly affect markets. However, we are nearing when the fallout is going to spill into markets in a palpable way, and flights to safety are likely to materialise at significantly higher levels.
We have moved from an itch to a festering sore and not bothered Doctor Gold. As the inflammation grows so too will the need for treatment.

 

[rederob]

before pictures ...always superceded by current pictures, wouldn't you say @rederob ?

Yes, for sure!

 

[rederob]

It was the strongest upleg I had seen for a very long time, and while US$ POG did not close above resistance, the fact it was breached does bode well.

US$1350 resistance has been well and truly smashed, so let's see if we will continue to see daily swings in excess of 1% in coming weeks that carry through the current momentum.
In AUD terms $2000 is a breath away. The media always gets a bit excited when these "milestones" get breached and money pours into gold ambitiously, adding fresh momentum.
In the few minutes between starting this post POG actually crept 8 dollars higher to sit over $1,372 which is +$28 so far today.

 

[IFocus]

My SMSF has been enjoying SAR and NCM contributions still will have to wait and see if this breakout is real and support holds the NY trade may decide other wise.

Surprised the gold bugs haven't been in more of a frenzy

 

[rederob]

My SMSF has been enjoying SAR and NCM contributions still will have to wait and see if this breakout is real and support holds the NY trade may decide otherwise.
Surprised the gold bugs haven't been in more of a frenzy

But, but but............... I am in a frenzy .



I said a whisper away just hours ago, and there it is - $2000 breached. Really enjoyed that it was a "gold" line showing they way up.

 

[BlindSquirrel]

I slung an upwards CFD in at 1362 this morning. I didn't expect it to propel up near 1390 for no reason, but I'll take it!

 

[rederob]

I slung an upwards CFD in at 1362 this morning. I didn't expect it to propel up near 1390 for no reason, but I'll take it!

Well done!
Biggest surprise after the gold rush this morning is that having screamed to a high, it has held its price for almost 2 hours now. I fully expected profit taking and a rapid fall after peaking near $1384. Instead, for the past hour it has very steadily inched up from $1377 to $1380.
So while there might not be much excitement here, maybe the god bugs are presently in play and propping up POG beyond our expectations.
Whatever...I too will take it as my 3 goldies lock in some nice gains.
May we all enjoy many happy returns, because it's been a long while.

 

[rederob]

Biggest surprise after the gold rush this morning is that having screamed to a high, it has held its price for almost 2 hours now.

Not only did it continue to hold up, it went up. And, has so far stayed up.


We can probably thank the Donald, because he's still beating his chest over Iran as I post, but this time about a US drone Iran shot down rather than toying with tankers.
Breaks like this in the gold price - ie US$44 above yesterday's Comex close - close-out lots of short positions and tend to reset the bar higher.
Given that trade tensions remain high, I am struggling to see a case for any substantial dip in POG. I also cannot see that the Donald has any capacity to quickly cool so many situations of his own making, so onward and upward is a real prospect rather than good luck.

 

[IFocus]

The irony doesn't escape me that The Donald is making me money

 

[rederob]

The irony doesn't escape me that The Donald is making me money.

He's good for gold, but otherwise.......



Anyhow, $1400 taken out decisively, with the upleg coming after Hong Kong opened: see above chart - same as yesterday.
POG needs to retrace, and the question will be where the bar is to be set.

 

[rederob]

POG closed the week less than a dollar shy of US$1400 which was a good outcome as I expected a lot more profit taking given the massive spike in price.



The bar held above $1380 yesterday and promisingly had a relatively steady ascent until market close.
The more short positions that get smashed, the better I say .
Let's see what tweets can do over the weekend to hold gold higher for longer.