Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Still On The Launching Pad

Commodities / Gold & Silver 2009 May 21, 2009 - 04:45 AM GMT

By: Guy_Lerner

Commodities

Best Financial Markets Analysis ArticleI last wrote about gold on April 30, 2009. In that article, I stated that gold was on the launching pad. Something big was going to happen. Gold had consolidated into a range that would lead to a breakout or a breakdown. The only problem I had no idea what direction gold was going.


To my credit, I did suggest going long at that time as gold was at support and this represented a low risk buying opportunity. But truth be told, I really had no clue or inclination that gold would be up 5% over the next month.

So let's review the technical picture and discuss some possible factors that could propel gold higher.

Figure 1 is a monthly chart of a continuous gold futures contract. Gold still remains within a very narrow range between support at 884 and resistance at 945. It is currently at the upper end of that range. This consolidation is our launching pad. A monthly close above 945 is the "breakout" that would make gold bugs happy.

Figure 1. Gold/ monthly

Figure 2 is a monthly chart of the SPDR Gold Trust (symbol: GLD). Our levels are shown, and a monthly close over 92.63 would be considered bullish.

Figure 2. GLD/ monthly

Figure 3 is a weekly chart of the GLD, and the range is noted with the upper end being at $95. This coincides with a down sloping trend line as well. For you "head and shoulder" buffs, the inverse pattern is obvious, and a breakout of the neck line at $95 would likely propel prices to $120.

Figure 3. GLD/ weekly

But let me reiterate that gold still remains in a range, and this can be easily seen in the next graph (figure 4), which is a weekly chart of a continuous gold futures contract. The indicator in the lower panel compares gold's performance to a basket of 8 currencies. The currencies that I am looking at are: 1) Australian Dollar; 2) Canadian Dollar; 3) Swiss Franc; 4) Eurodollar; 5) British Pound; 6) Singaporean Dollar; 7) Japanese Yen; 8) US Dollar. The indicator, which should lead the price action, remains range bound - like the price of gold.

Figure 4. Gold v. Currencies/ weekly

The fundamentals for gold are easiest explained by the competing forces of inflation and deflation. The ultra easy monetary policies of central bankers are today's seeds that are sowing tomorrow's inflation. Stock market weakness, which I have been expecting for several weeks now, will likely bring about another round of "alphabet soup" programs from the Fed and Treasury. The expectation is that the government will do whatever it takes to prop up asset prices. Under such a scenario, gold will act as a safe haven during stock market weakness, and there is little doubt that stock market weakness and expected government interventions will fuel inflationary expectations. These are the tailwinds that might propel gold higher. On the other hand, the global recession isn't over, and deflation still remains a threat. Although the technical picture appears favorable, gold remains range bound, which I believe reflects the current fundamental dynamics.

By Guy Lerner

http://thetechnicaltakedotcom.blogspot.com/

Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

© 2009 Copyright Guy Lerner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Guy Lerner Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jerry
21 May 09, 08:33
Gold Price Still On The Launching Pad

I agree with you…things are looking crazy.. I actually wonder if our standard of living will reach 3rd world status. If so, I plan to maintain hope by living simply, starting a little business, having great conversations with those I know and meet, taking fiestas in the afternoon, and “loving on” family and friends in cookouts, picnics, talks by bonfires, and assisting those who are struggling. I mean who are we, what are we here for, and what happens to us when we die…In the meantime, when we are weary and need rest from all this madness, we have an open invitation to come for rest from God…He truly cares and loves all of us. I plan to take Him up on His invitation…How about you?...There is HOPE!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in