December 23
December 22
Gold markets fell a bit on Thursday as the markets continue to lose volume. The shooting star from Wednesday did in fact get triggered to the downside, but the market just didn’t have enough people involved in order to make a large move. The downside risk still remains though, and the area we are currently in looks very resistive. With this in mind, if we had to take a position – it would be a sell. However, with Friday being the last day before the holidays, it is likely we won’t get involved.
December 22
UPDATE
Gold markets rose initially on Wednesday, only to fall back down in the end. The cluster of previous support just above the $1,600 level has acted as resistance, and the daily candle has formed a shooting star, a very bearish sign indeed. Because of the shape of the candle and the location, we simply must step back as it looks like the gold market is going to fall gain. A breaking of the lows from Wednesday is actually a sell signal, and should see a move back down to $1,550. However, if the market can manage to break above the top of the Wednesday range, it would be a significant bull signal telling us to buy. We generally don’t like the idea of selling gold, but the move looks like it might just have more gas left in the tank at this point.
The $1,500 level below is certainly a significant support level as it is a large psychologically important round number, and the bulls will certainly step in at that point if the market gets down there. The gold markets have enjoyed a large uptrend over the last 10 years, and these pullbacks do come back from time to time, and the moves have been very brutal if you were long at these points in time. However, over time the bulls were redeemed in the end, and if they held on – they made a fortune.
The market is still a long term buy, but the current price action has us concerned about the health of the market currently. The end of year thin volume will certainly increase the possibility of a breakdown or melt up, but the overall looks just doesn’t have us as bullish as we were just a few weeks ago.
The next year should be bullish for gold in general as the European Central Bank is almost assured to start printing Euros to fund all of the mess over there, and gold will get a little bit of a bid due to this. Also, the US dollar is being devalued over the long run, so it is hard to see how gold ends up lower next year. With all of this in mind, you couldn’t be blamed for simply ignoring this market for a few weeks or even do something we almost never do – sell it for a short-term gain to the downside.
December 22
Gold’s situation has been choppy, neither in a classic consolidating nor in a trending market. So what is coming up for gold?
Gold is now about to test the 1610-1613 to see if it breaks the currently upwards trend momentum. If it doesn’t then expect it to head back to 1625. A plunge for gold down is more on the cards, such a meteoric rise after such a huge crash from 1750 to 1560, is not very healthy in the short term. If gold goes below 1605, expect a move down towards the 1590 level.
December 21
SPOT GOLD closed higher due to short covering on Tuesday anfd the highrange close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible nearterm. If it extends this month's decline, September's low crossing is the next downside target. Closes above the 20day moving average crossing are needed to confirm that a low has been posted.
December 20
GOLD continues to consolidate despite falling equity markets and continued pessimism over Europe in a sign that the price may have bottomed after last week’s fall that seemed to be prompted by signs that the Federal Reserve is less likely to pursue further quantitative easing. Gold traded in a $1,587 to $1,608 range overnight. It has given up gains above $1,600 as the EUR and equity markets fell in response to ECB President Draghi’s comments about the significant risks in Europe and how 2012 will be a very difficult year for the banks. This prompted a sell off in financial stocks. Gold has now slumped more than 17% from its all time record high of $1924 achieved on September 6 despite being still 12 higher for the year. It opens this morning barely changed from the levels yesterday morning and our view on the metal has not changed. We are still looking for the price to spike above $1,640 to confirm that a bottom is in place and for us to change our medium term view to bullish.
Compass Direction- Short-Term: BULLISH
- Medium-Term: NEUTRAL
December 19
The Friday session saw gold regain some of its losses for the week, albeit in a very small way. The session actually broke the top of the shooting star on Thursday, and could be the start of a possible bounce as a breaking of that top signifies at least some interest in buying the yellow metal. The long-term trend is still up, but the move recently has been brutal. We are waiting to see another day or two of calm before we buy again. The support level extends all the way down to $1,500 or so, and as a result we could see support here – meaning we won’t buy.
Gold saw a blood bath due to the extreme volatility of the markets and a panic liquidation of all assets that performed the best this year. Gold compared to most equities was up 25% before the initial sell off and even after the sell off was above 15% gain this year. (People sell their winning positions to prop up their losing positions).
Gold looks like it is in an up-trend and headed higher. Well it can however chances are it might plumment down and smash through the purple take profit levels. Perhaps shorting the market when it breaches through the black-line is wise.
If gold continues to rise, a take profit level of 1608 would be prudent for the short term.
Gold prices rose on Friday, where traders’ targeted gold as a safe haven amid the pessimism that is surrounding the outlook for the European debt crisis, while economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end.
This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.
On Monday, eyes will be focused on the French auction, with hopes bond yields decline this time, as rating agencies still has its top credit rating under the line of fire.
Accordingly, we should expect more fluctuations for gold, but should the current pessimism persist, we should expect gold prices to extend the rallies, however, the level of uncertainty is very high, and investors are ought to remain cautious.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
