Gold Price - Where is it heading?

[barney]

Well a strong move is on this early Sat morning.

Gold Back to the highs of the August Range.

Index's belted a bit …

AUD/USD meandering around the 50% level of the August Range

Lots of jockeying for positions all over the shop … interesting few months coming up.

 

[IFocus]

Gold price $1526 ish on close so looking for my gold miners to recover Monday hopefully (heaven forbid) the Donald keeps tweeting

 

[rederob]

Gold price $1526 ish on close so looking for my gold miners to recover Monday hopefully (heaven forbid) the Donald keeps tweeting

Your wish was granted, with a race to yet another recent high kicking off trading- do we call it a Trumped up charge?



I looked at other charts to post showing the longer term perspective, and the current monthly-data chart series look very scary - too high too fast!
So this one shows where we are in terms of "bullish sentiment":



The gold bull is a long game and fraught with stairs up and elevators down during daily trading. So I am going to set some price targets for some of my gold equities to lock in profits along the way, and buy back on dips. Am starting with RMS at $1.70 and NCM at $42 and will be happy to wait it out.

 

[BlindSquirrel]

I got kicked out of my CFD uppies (trailing stops too tight) on Friday night at around 1502. Oh well.

 

[rederob]

Looking at POG from a slightly different perspective, it has risen less than US$200 since April last year.
We know from the $HUI at post 11903 that the prospect of a doubling is in play, which means it's still very early days.



From a shorter term perspective the standout is respect of support, which for much of August was $1490.


The present support point is $1525, and this will hold short term only if our fumbling world leaders can't properly mix the economic ingredients needed so that we can all share a slice of the pie we deserve.
Right now, my reckoning is on $1600 being hit a good deal sooner than I would prefer, as we need a lot longer for POG to consolidate in the $1500s in order to avoid the really big price swings.

 

[rederob]

In recent months the first website opened each morning is at Goldprice.org to see what played out overnight. So last evening there was a small dip.
The site has a great charting tool that lets you examine a few dozen indicators, and drill into the action minute by minute. So below is a snapshot I just took, and there are some revealing tendencies (much clearer when you open the chart):



I chose Bollinger bands and momentum as indicators, and looked for simple "trading" points.
Entry indicators occur when momentum breaches -4, and selling indicators occur when POG prices pierce the upper Bollinger band. It's a simple trading strategy, but I do not trade and just show it as an example given that patterns repeat ad infinitum in trading and it's just a matter of working out if they have decision value.
Less evident is that not a great deal happens between 16:00 and 20:00 New York Time, when volumes drop off markedly and the price meanders for some hours.
Our OZ goldies don't particularly care about intraday POG so the above is not too helpful except in knowing whether or not the price shifts are up or down, and if it they are significant.

 

[rederob]

POG kept its cool over the week, closing above $1500 although it dropped from its earlier high:



There is fair support around $1520 with a downside risk to $1490ish.
US data this week is likely to support another Fed rate cut. That cut might not be soon, but its likelihood is getting stronger, and while that's in play there is minimal downside risk to POG.
That's confirmed by the punters going long on gold, as shown below. It's a bull market and bets on the downside have fizzled out for now.



The Gold Bugs Index (HUI) again rose, but remains below 250, and also below the 2016 highs (see above chart of 26 August) so this is a journey with a lot more promise.

 

[rederob]

I have reverted to screenshots because many of the linked charts I posted in earlier months are auto-updated and no longer reflect the commentary which was attached - sorry!



The above shows where this bull run commenced.
Kicking off in June, there was a strong run north in the third week which lead to a close above long-term resistance on the 19th.
All uplegs have had reasonable consolidation, albeit too brief for my liking. The strong positive here is that no parabolic increases are evident, so the prospect of a sustaining sharp fall is presently exceptionally low.
Chartists who want to draw a trading channel will notice that the range is presently $1480 to $1560, so no need to be nervous despite today's close realising yet another multi-year high.

 

[explod]

And the Aussie Gold Price is far into an all time high, and again on the chart looks set to continue.

 

[rederob]

Back on 25 August POG jumped $60 in a day and set benchmark high for a follow through close.



We are getting closer by the day, and once that occurs the next point of resistance at $1600 will be within a day's momentum.
We have Brexit and Trump to thank, so keep an eye on the turmoil to see how sustaining this crazy run north is likely to be.
My reckoning has $1600 breached before the Poms go to the polls next month. And if that election turns the UK into a dog's breakfast - if it is not already - then POG will remain strong.
Although a $300 increase over 3-4 months does not sound sustainable, it's not the right way to think about what is happening. The question really is, "where is my money safer, if things keep going pear shaped." I am not talking about mug punters in equities like us but, instead, those with mega millions to play with.
Think about this for a moment: For several years after the GFC, POG continued to rise.
Why?
Because it took a number of years for markets to appear to be over the worst of it. Moreover, POG post GFC never fell below POG prior to the GFC, despite falling off a cliff after reaching $1,917.90 an ounce on August 22, 2011.
If we took that base case as an example, then whatever ills are likely to hit global markets in months to come, there is a prospect that POG at $1550 will hold as a minimum. Translating this to OZ goldies, that's a lot of annual profit. So mug punters now into Oz goldies might have a dividend stream to look forward to, whereas prior investments were more a hope and a prayer .

 

[rederob]

An interesting week for POG - closing much lower than it began.
I personally prefer this "cooling" in price so as to avoid an irrational splurge that leads to significant volatility rather than relatively orderly progression.
So, we see good price support around $1490:



A closer look at trading action over the past 24 hours shows that as prices dip to nearer $1500 we get very strong buying action.



There's no positive news globally, so POG should trade in the range it has for the past week or so, barring the unforeseen.

 

[rederob]

Gold has spent a few days heading south, and I am hoping for a dip to around $1490:



Momentum at posting this was still downward, so profit takers are filling their bags.
Whatever direction from here, I am happy, as we need POG around these levels for consolidation to occur.
Fundamentals for further northward movements remains strong, with a rate cut from the Federal Reserve far more likely than any increase. So big money will store its wealth in gold where it tends to be safe in these uncertain times. And from previous charts I have posted, the Gold Bugs Index has a long way to go before it gets overheated.

 

[CanOz]

Gold longs are a crowded trade according to COT. If this thing gets going we could get some nice liquidation....volatility is certain and better volumes than indices at the moment. Go and cl are a day traders wet dream in September.

 

[rederob]

From the above hourly chart you can see that POG has dropped to month-ago lows after selldowns during the past week.
There was no particular trigger for the selldowns, and there is nothing suggesting it is other than profit-taking.
Back on 13 August when POG fell off a cliff, it was 10 days before the price next spiked up sharply, and this run south has been only 5 days. So if you have no gold equities in your portfolio, maybe now would be good to look at a few. My preference would be Newcrest, with expected production of about 2.5moz in fy2020 at AISC around USD$750, and free cash flow now estimated over $1B - read their investor presentation dated 10 September for full details.
Now doubt there are other Oz goldies that have excellent short term potential, but if you are in this for the long haul, NCM has the best metrics of all larger producers.

 

[rederob]

Gold has been bouncing around off its 30 day low this week and might just end closing a touch higher than it began:



This is exactly what the doctor ordered, imho, as its trading channel is intact, suggesting its rise to $1600 is unlikely to be as volatile as it looked a week ago.

Regularly posting on POG can be a bit of a waste of time given how long it can take to decisively go in any particular direction. But these are not ordinary times.

We have never before had a "trade war" of such proportions, concurrent with an unsettled Europe and sabre rattling on the oil front. We also have some central bank interest rates in the negatives, while Trump is pressuring the Federal Reserve to cut deeply.

How long these issues will take to resolve themselves is anyone's guess, but at the very best a Brexit outcome would be 31 October. That, however, will cause its own economic tumult until a semblance of order appears - so we are looking into next year!

Speaking of Central Banks, they have been diversifying out of US dollars and into gold in a big way, and it's hard seeing that trend falling away in the present global climate.

On the trade war front it's difficult to see Trump backing down until the so called big end of town tells him that his tariffs are disproportionately affecting US businesses. We already know consumers have been hit, but Trump never feels their pain, so they do not count.
Onwards we go....
....

 

[Garpal Gumnut]

Gold has been bouncing around off its 30 day low this week and might just end closing a touch higher than it began:

View attachment 97397

This is exactly what the doctor ordered, imho, as its trading channel is intact, suggesting its rise to $1600 is unlikely to be as volatile as it looked a week ago.

Regularly posting on POG can be a bit of a waste of time given how long it can take to decisively go in any particular direction. But these are not ordinary times.

We have never before had a "trade war" of such proportions, concurrent with an unsettled Europe and sabre rattling on the oil front. We also have some central bank interest rates in the negatives, while Trump is pressuring the Federal Reserve to cut deeply.

How long these issues will take to resolve themselves is anyone's guess, but at the very best a Brexit outcome would be 31 October. That, however, will cause its own economic tumult until a semblance of order appears - so we are looking into next year!

Speaking of Central Banks, they have been diversifying out of US dollars and into gold in a big way, and it's hard seeing that trend falling away in the present global climate.

On the trade war front it's difficult to see Trump backing down until the so called big end of town tells him that his tariffs are disproportionately affecting US businesses. We already know consumers have been hit, but Trump never feels their pain, so they do not count.
Onwards we go....
....

Thanks @rederob for such a good summary of chaos theory in action atm.

I've never been a Gold bug except in the early 80's when I bought a heap of physical which is in a "safe place" somewhere in Casa Gumnut. It would take a day to find it, but will be a fallback. I bought at $600 from memory and kicked myself for over a decade but feel quite gruntled in retrospect.

gg

 

[rederob]

If you were writing the script for gold to rise into a supportive market, then the chart would look like this:


Breach of long-term resistance in June, consolidation with minimal slippage until August when it soon took out its next technical resistance at around $1500, and then carried through for over a month, further consolidating.
Present support is at $1485, and dips to that level have been quickly countered.
The past week proved interesting for two reasons:

1. The strike on Aramco's oil production facility led to POG increasing a measly percentage point, and
2. The Fed rate drop actually led to POG immediately declining.

Both these issues are behind us now. However each casts a longer shadow, and these are supportive of gold rallying rather than declining.
In the first case, it shows how fragile oil facilities are and the potential for damage to severely affect global markets. And that's aside from the political posturing over Middle East issues that continue to fuel the fires.
Meanwhile the Fed decision means big money needs a safer home than banks and bonds.
All the while Brexit simmers in the background, and China has gone off the boil.
It's a picture that I like being painted, and am in no hurry to see finished.

 

[rederob]

Tonight POG is testing $1485.
Let's see how it goes.
Whatever the outcome, the important thing to remember is that this IS a bull market and breaching support is not a death sentence, especially not in the present global climate.
Techies can recalibrate likely trajectories.
The one thing I will enjoy is watching POG break through $1600 some time in the medium term (possibly sooner), while solid gold producers will be raking in strong profits from the extra several hundreds of dollars per ounce they will be generating.
My advice - buy the big dips. And we have not had any yet, so find something on Netflix to binge watch while waiting.

 

[rederob]

Below is the 30 minute chart for gold:



Support arrived at $1460 and this is seen from the hourly chart below:



Although much too early to say there won't be another retrace, my suspicion is that $1485 could hold for a while longer, and that sizable dips will be bought out relatively quickly.
In the inimitable words of Keating, "this was the progression we had to have."

 

[Smurf1976]

The past week proved interesting for two reasons:

1. The strike on Aramco's oil production facility led to POG increasing a measly percentage point, and
2. The Fed rate drop actually led to POG immediately declining.

Both these issues are behind us now. However each casts a longer shadow, and these are supportive of gold rallying rather than declining.
In the first case, it shows how fragile oil facilities are and the potential for damage to severely affect global markets. And that's aside from the political posturing over Middle East issues that continue to fuel the fires.
Meanwhile the Fed decision means big money needs a safer home than banks and bonds.

Interested in how you see this in relation to other "physical" assets?

Oil is one obviously which directly relates to the points you make but also the other precious metals, commodities, real estate etc. At a simple level these issues would also apply to those things would they not?

Or are you seeing that it's a situation somewhat unique to gold and gold alone?