Gold Price - Where is it heading?

A clear break though is probably what was desired, but not expected. I thought more consolidation would have been healthier. But, perhaps there had been enough bouncy bouncy* sideways for a significant break to occur at some stage. Also perhaps once a break was happening technical traders jumped in to drive it. The levels we've been discussing have been circulating around the place. Been watching this closely since the 29 Sep low with high expectations so this is quite satisfying. Next stop is the June high at $1907.

Gold price has room to run to $1900

(Kitco News) - The gold market is seeing new bullish momentum after U.S. inflation data rose to its highest level in more than three decades, and some analysts are looking for a move back to $1,900 an ounce in the near term.

According to some analysts, gold is catching a new bid as inflation pressures ramp up, raising concerns that the Federal Reserve will be behind the inflation curve.

"Inflation is here and it's only going to get worse," said Bob Haberkorn, senior commodities broker with RJO Futures. "There is a major concern that the Federal Reserve is limited to what it can do to stop inflation from rising. There is a real fear among investors that the Fed will lose control."

The latest inflation data pointed to broad-based increases in consumer goods. Food was up 5.3% from a year ago – the biggest increase since January 2009. Gasoline prices surged 6.1%, marking the biggest gain since March.

The rise in inflation comes as U.S. consumers start their holiday shopping and prepare for Thanksgiving.

Helping to support gold's breakout through critical resistance at $1,835 has been a drop in real interest rates. Following the latest Consumer Price Index data, real yields on 10-year notes dropped to a record low of -1.235%.

Along with the drop in real yields the break-even rate, the difference between nominal 10-year bond yields and Treasury Inflation-Protected Securities rose to 2.64%. Analysts note this indicates that bond markets are pricing in even more inflation risk.

While off their highs, gold prices last traded at $1,858 an ounce, up 1.5% on the day. The precious metal is currently trading at a five-month high.

Haberkorn added that he expects that this is just the start of gold's move higher. He said that his next target for gold is between $1,900 and $1,920.

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*TM @finicky

Kitko tend to see the positive side of PMs, and you don't hear too many dooms day predictions, so gold stocks* 'doubling' next year should be taken with a grain of salt. I'd be happy for 1900 for a start. And I'd prefer it didn't go there overnight but in a nice measured methodical way - consolidating, developing support, breaking, consolidating....

So, a "huge explosive move" is not what I really want right now, too much cash on the sidelines. Maybe can't afford not to be fully invested in this potential move.

“GDX and SLV were in a bear market just a week ago,” Vermeulen said. “They have moved to a recovery stage. Now they’re in yellow, which is accumulation. They’re starting to just get some momentum in them, and they’re starting to get into another bull market. Gold should rally to $2,600. Gold miners, I think, will have a huge, explosive move.”

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*edit: originally said gold doubling but article specifies gold stocks.

Things are looking bullish for the next three months.

This gold price level to spark even a bigger rally – analysts​

Anna Golubova
Friday November 12, 2021 15:52

After a solid breakout above $1,850 an ounce, gold could be ready for even bigger gains. But first, the precious metal must breach this level, according to analysts.

Inflation accelerating to three-decade highs in the U.S. has pushed investors towards gold, with the precious metal up nearly 3% on the week and December Comex gold futures last trading at $1,865.90.

"It is all about inflation. The market is starting to embrace the fact that inflation will be longer-lasting. It will take years to fix the supply chain issues due to pandemic, all the stimulus, and tons of pent-up demand," RJO Futures senior market strategist Frank Cholly told Kitco News.

All eyes will be on the $1,835-$1,875 trading range for gold. A move below would indicate the end of the current rally, while a move above could trigger a move towards $2,000 an ounce.

"What's going to be critical to sustaining this breakout is that the market can hold $1,835. We want to be able to keep the prices above there," he said. "On the other hand, a close above $1,875 would spark a secondary rally to $1,900-25. I do think we may see $2,000 by the end of this year."

Trade the Trend *weekly update & covers Gold chart from 9:20 onwards.. mentions possibility of Gold reaching US$2,400

You can get valuable gen on individual gold stocks and support him for less than a couple of coffee a month on https://www.patreon.com/user?u=27729908
I have no relationship, just a subscriber.

finicky said:

You can get valuable gen on individual gold stocks and support him for less than a couple of coffee a month on https://www.patreon.com/user?u=27729908
I have no relationship, just a subscriber.

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I've thought about it, but from what I've seen he doesn't give any more valuable info than our bouncy bouncy TA and FA on ASF.

inflation

Should be an interesting week for gold next week. IMO, needs some more consolidation, but word seems to be that the potential new Fed Gov may be a catalyst for another jump. Should see some support around the blue circle for another bound higher. Breaking down through $1830 support and the upward break needs to be reconsidered.

From Kitco

"Looking to next week, we are going to get Biden's decision. Two months ago, Powell was the likely choice. But we got the trading scandal among Fed members and progressives got upset with how Powell handled the regulatory side," OANDA senior market analyst Edward Moya told Kitco News. "Now, it seems that Powell's renomination might not be a foregone confusion. If we do get a surprise and Brainard becomes the next Fed Chair, it will have a dramatic shift in short-term yields. That's a big risk ahead. Key factor what happens with yields early next week."

If Biden were to choose Brainard, gold would climb higher as the initial reaction would see those Fed rate hike expectations pushed back even further, Moya explained. However, if Powell is renominated, it doesn't necessarily mean gold would sell off dramatically. "Risk is still to the upside," he said.

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Sean K said:

Should be an interesting week for gold next week. IMO, needs some more consolidation, but word seems to be that the potential new Fed Gov may be a catalyst for another jump. Should see some support around the blue circle for another bound higher. Breaking down through $1830 support and the upward break needs to be reconsidered.

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Well, that put a spanner amongst the pigeons. The same Gov has been nominated who was not what gold bugs were looking for. Back to the drawing board short term for what has been a solid run for POG. Not sure if this can be reversed quickly unless this is seen as a buying opportunity and the weekly chart rebounds back above $1830.

The fed has a lot of protecting to do.
It has to protect the large commercial banks, protect the share market, protect the Bond market.
The PM market does not rate a mention.
Mick

RBNZ increase OCR 25BP > .75%

mullokintyre said:

The fed has a lot of protecting to do.
It has to protect the large commercial banks, protect the share market, protect the Bond market.
The PM market does not rate a mention.
Mick

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pretty sure if the bond market goes belly up we all go belly up, fed wont make any difference

It’s hard to tell which direction Gold is taking, commentators are suggesting Gold will do much better in 2022, back above $2000. The USD is stubbornly high though. Am still holding NST share from October 2020 and have recently bought NCM shares as long term holds.

DannyB0000 said:

It’s hard to tell which direction Gold is taking, commentators are suggesting Gold will do much better in 2022, back above $2000. The USD is stubbornly high though. Am still holding NST share from October 2020 and have recently bought NCM shares as long term holds.

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Unless there's a dramatic turn around this week, USD POG is back in it's sideways range from last year. It was travelling so neatly for a proper break up as well. The longer the sideways movement though, the bigger a break up will probably be.

Jordan Roy Byrne was pretty much tipping this. He seemed very lukewarm on the chance of it breaking through 1900. He's a good follow for remaining sobre and patient about gold.
Needn't stop us investing in A$ goldies though.

finicky said:

Jordan Roy Byrne was pretty much tipping this. He seemed very lukewarm on the chance of it breaking through 1900. He's a good follow for remaining sobre and patient about gold.
Needn't stop us investing in A$ goldies though.

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He can post up here if he likes finicky.

Last week, an ADAPT Weekly reader asked about my thoughts regarding investing in Gold…

Not that my opinion is all that important – remember, the only thing that pays to watch is price.

I’ll say it again: If you’re going to pay attention to anything, pay attention to price.

So here’s the scoop…

We’ve avoided gold for more than a year now, and for good reason – it was a chronic underperformer (as you’ll see in a moment).

However, there are signs that this underperformance could be changing.

Not only are gold futures moving higher in absolute terms, but they’re also finding support at a perfectly logical place relative to their alternatives.

It’s this Relative Strength that investors will want to know about.

Here’s what I mean – using Gold versus Commodities as an example.



Over the last year, the strength out of Commodities has made it difficult for anything to show relative outperformance.

You can see how Gold underperformed Commodities. See that line moving from upper left to lower right?

That’s a downtrend, ladies and gentlemen. Gold is showing a massive underperformance versus Commodities.

With that said, Gold looks like it’s trying to hold above a key area of former resistance that may become support. Makes sense, as this would be a logical level for gold to stop underperforming.

Now obviously, the market doesn’t care about my potential support and resistance lines. But as an investor, you’ll want to at least be aware of these areas of support or resistance and follow them closely for any sign of additional improvement or deterioration.

A strong reversal up from these levels indicates relative outperformance by Gold versus Commodities. And where we see relative outperformance, we also tend to find absolute outperformance.

We’re seeing improvements in other cross-asset comparisons as well – it’s not just limited to commodities. The picture looks similar when looking at the Stocks versus Gold ratio as it runs a key Fibonacci level.



What we’re seeing here is stocks losing Relative Strength versus Gold right at 2.80.

At the same time, Stock’s momentum is trending down, as seen in the lower panel.

So, assuming Gold can begin to exhibit real strength on a relative basis – how should investors get involved?

One way is through the SPDR Gold ETF (GLD). Another option is via gold miners.

In the chart below you can see how the Gold Miners ETF (GDX) recently bounced off a key area of former resistance now acting as potential support.



If GDX holds above 31, there’s some interesting upside here.

I already know what’s coming after you read this week’s article… I’m expecting several emails to the effect of…

“Nice timing Reilly, guess you didn’t see the price chart of GLD yesterday…”

Yes, I saw it and I’m aware that GLD slid 4% on the day.

So let me remind you – reversals of relative strength are a process, not a one-time event.

We’re interested in the trend, not a single day’s price action.

It’s too soon to anoint Gold as the Relative Strength victor, just as it’s too soon to claim Gold is dead in the water.

The point for investors like yourselves is to keep an open mind and be aware of changing relationships in Relative Strength.

Personally, I don't care which direction gold goes, up or down. I just wish it would make up its mind where it is going.

Each time it changes direction I lose a few more hairs off my head. Its been my biggest trend following loser this year.

KH

Peter Grandich just announced that he has started sand-bagging with gold and silver against dire events to come. He has a record of foresightful macro calls if you believe him, which I do. E.g anticipated the recent uranium stocks revival. He has a buying plan for the pnysical metals whereas in the past when making a call on the precious metals he has gone for miners with a view to profitable trading rather than retreating to the bunker.

"On the belief that the greatest financial bubble of all-time is on its last legs, and America is now deeply entrenched in it’s worst-ever economic, social and political crisis, I now wish to own gold and silver not just for capital appreciation in mining shares, but also in lieu of keeping some cash in currency.

My strategy now is:

Gold – buy a third today, another third if it retrests to around $1,700 and the last third if it falls back to it’s 200-Day M.A. around $1,600

Silver – buy a third today, another third on a retreat to around $22.50 and the remaining third around $21.50"

finicky said:

Peter Grandich just announced that he has started sand-bagging with gold and silver against dire events to come.

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I follow his YouTube channel and it was interesting that he even recently sold out of his uranium stocks (even though still long term bullish) in order to cash up for the inevitable gold and silver run.