Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Why Gold Bulls Should be Excited

Commodities / Gold and Silver 2010 Mar 05, 2010 - 05:17 PM GMT

By: Seven_Days_Ahead


Best Financial Markets Analysis ArticleThe Technical Trader’s view


The market took it’s time to break free of the Prior high Pivot from 1980 at 873.

The consolidation of the market at that level was unambiguously left behind last month.

So the next bull leg is ready to begin and there is good support on any pull backs at both 1033.90 and 873.



The catalyst for the market’s surge away from the 873 Prior High was the formation of a Head and Shoulders Continuation pattern that completed in September 2009.

The initial surge fell well short of the minimum measured move (up to about 1340), and fell back to the Neckline where there was good support.

Check out the detail of the bounce from the Neckline.



Certainly there is a completed bull falling wedge – not the most reliable of patterns - note well the completed Head and Shoulders Reversal – in the last few days….

The neckline support for the H&S pattern is at 1135 or so.

The horizontal support at 1126 beneath.

Minimum measured move? Short-term as far as 1220….

The Macro Trader’s view:
The Gold market has held our attention for several years now and during that time we have been long-term bulls of the market, despite several corrections lower during its long march higher. We believe the recent period of weakness in this market has been a correction.

As we have explained in previous commentaries on Gold, we believe the correction was started by a surprisingly stronger US non-farm payroll report at the beginning of December last year.

The release of that number began a strong rally in the Dollar as traders began finally to believe in the US economic recovery, which appeared to rob gold of the safe haven status it had enjoyed during the years of Dollar weakness. But when, over the last few months, a run of mixed data from the US and elsewhere placed a question mark over general recovery the Dollar rallied further as a safe haven and Gold was sold again.

The final phase to date has been the Greek debt crisis, which at its height forced a selloff in several asset classes as traders cut risk and fled, again, to the relative safety of the US Dollar and Japanese Yen.

Now we see Gold once more attempting to go higher. The fears over Greece haven’t gone away, but traders currently judge the wider sovereign credit default they feared now looks less likely. Greece has embarked on a tough austerity program, which has calmed markets to the extent that traders are again moving back into riskier asset classes, stocks and commodities among them.

Gold has resumed its position of hedge of last resort formerly enjoyed at times of Dollar weakness. But the Dollar is well-supported now, so that relationship seems to have changed. The reason for this seems to be down to market perceptions of how and when the authorities, will seek to withdraw the massive stimulus injected into the US and Global economy to guard against financial market meltdown.

The US and UK have governments are reluctant to withdraw the fiscal stimulus for fear of precipitating an economic relapse, despite evidence of economic revival, which in the US looks very strong; Q4 GDP @ 5.9% annualised equivalent to just under 1.5% q/q.

Moreover the monetary authorities, the Fed and Bank of England, are reluctant to adjust monetary policy. Both Central Banks continue to see a risk of relapse. In the US this is mainly due to the high level of unemployment that resulted from recession.  And with inflation still benign the Fed has the luxury of time on its side. In the UK inflation is higher, but the Bank dismisses this as due to one-offs that will correct. And with a large output gap in the UK, economy policy makers’ judge that they too, have the luxury of time.

But note well how when risk aversion recedes as traders become more confident about recovery, Gold now rallies. The reason is that markets do not trust the authorities to time their exit strategies in such away to avoid inflation.

So although the Dollar remains supported, Gold too looks set to rally further, independently of the price action in the Dollar, as the body of evidence supporting a strengthening recovery builds.
We believe the correction in Gold to be over.

Mark Sturdy
John Lewis

Seven Days Ahead
Be sure to sign up for and receive these articles automatically at Market Updates

Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.

© 2010 Copyright Seven Days Ahead - 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.

Seven Days Ahead Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

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

6 Critical Money Making Rules