Thursday, May 21, 2015

Gold Trend May 22, 2015

Long Term ~ Bearish- Need a monthly close above 1800 to confirm the bull market
 final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Bearish- Need a monthly close above 1255 to remove bearish trend.
Intermediate Term ~ Bullish– Resistance for this week 1234-1244.
Short Term ~Neutral–Short term cycles are due to peak and turn down 
between the 18th and 21st into the beginning of June.  

Initial Resistance 1214-1218 2nd tier 1222-1227
Support 1193-1203 2nd tier 1182-1186

How about the latest GDP statistics?
The San Francisco Fed decided that the weak Q1 GDP data simply needed to be seasonally adjusted (again) in order to make it ...well, less weak.
The official estimate of real GDP growth for the first three months of 2015 was shockingly weak. However, such estimates in the past appear to have understated first-quarter growth fairly consistently, even though they are adjusted to try to account for seasonal patterns. Applying a second round of seasonal adjustment corrects this residual seasonality. After this correction, aggregate output grew much faster in the first quarter than reported.
Got that? 
There was still some "residual seasonality" (i.e. the data still looked weak) in the Q1 print after the first round of seasonal adjustments, so in order to "correct" things, a second round of seasonal adjustments needs to be applied, after which the new figures should show that the economy did not in fact flat-line in the first three months of the year. Of course if the numbers still don't come out looking the way you want them, you can always rinse and repeat.  As Zerohedge put it two days ago:
And if the double seasonally adjusted data doesn't work? Why triple adjust it, then quadruple adjust it, until you get precisely the goal seek number you want, as US economic "data" promptly devolve to a level of ridiculousness that will make even the Chinese Department of Truth turn green with envy.
Sure enough, CNBC reported Wednesday that the double seasonal adjustments are indeed in the works.
Things are just getting more outrageous all the time.

Gold Short Term
If we zoom in on gold we see that the pullback has reached the upper 2nd tier support we posted on the weekend update (1192-1202) as price reached 1201 today.  It is possible we made the low for the week but we still can’t rule out a test of 1192.  More important is whether we are going to go lower into the 1st week of June as the short term cycles favor?
And that is the crux as we enter Friday.  If we were in a bullish cycle mode  we would favor the low for the week is in place and we are going higher on Friday.  That still may be the case and while I favor that, I cannot eliminate another day and week with a close under the medium term moving averages (1206-1220).  With this week’s action we will now need a close above 1239-1244 to favor higher sustaining prices.
Support for Friday will be that 1192-1202 area and then 1182-1187.  Resistance will be the 1212-1222 area.   
gold short term price chart
What Next?
When we look at the overall picture, while things have improved vastly for gold we have to be careful that this is not a bull trap with prices ready to turn back down.  That has happened over and over during the past few years and we do need to be cautious.  
While it is always hard to remain on the sidelines when gold moves higher, we have to remember that last weeks low at 1178 is only 50 dollars higher than the full bear market low of Nov 2014.  So it’s not like we are missing some big gold move.   On the contrary just one look at the GDX chart above shows a potential head and shoulder pattern.  
At the moment, we have to favor gold peaks this week and pulls back into the 1st week of June.

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M Samer Al Reifae
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 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