Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, Stocks Market Turbulence

Commodities / Gold and Silver 2014 Oct 10, 2014 - 03:40 PM GMT

By: Alasdair_Macleod

Commodities This week has seen highly volatile equities (mostly down), bond yields sharply lower, the oil price hard down, and gold side-lined but recovering after a miserable month or two. On the news front, the S&P rating agency reminded us that Greece is likely to default, Germany released some horrible industrial production numbers, and the Federal Open Market Committee unexpectedly released dovish minutes. So what’s it all about?


This week more than any other it became clear that the global economy is stalling, with the threat of outright recession in the Eurozone and Japan affecting other economies. And in the US, while much is made of an improving jobs scene, the fact remains that in relation to the size of the workforce there is a greater percentage of working-age people not employed since the days when women stayed at home rather than worked.

This is creating a two-way pull for gold and silver. Declining commodity prices coupled with a strong dollar have hit both precious metals hard since mid-August with gold falling $130 at worst, and silver having been in continual decline since mid-July. However, both metals have become oversold and as a result have bounced firmly off support at $1180 and $16.75 respectively. The chart below is of gold from its all-time high and its 200-day moving average.



Bulls hope that gold has formed a triple-bottom pattern, which if true suggests the subsequent move will be strongly upwards. However, triple-bottom patterns are uncommon and often turn out to be flag patterns, or consolidations in a continuing bear market. We will need to see gold trading convincingly above the 200-day moving average (currently at $1283) for confirmation the market has turned. Until then the computers that trade to programmed formulae are likely to remain on the bear tack on the basis that the downtrend is still in place.

These bears include analysts who either think that next year US interest rates will rise, which is seen to be bad for gold, or alternatively see a deepening recession leading to a stronger dollar, measured against other currencies. When the FOMC came out with minutes postponing rising interest rates, gold and silver were the best performers in the commodity complex.

Those who think rising interest rates are bad for gold forget that during the 1970s interest rates rose over the decade and gold also rose from a low of $36 in June 1970 to over $800 at the end of the decade. And those who think falling prices seen in a slump are bad for gold forget that in 1934 the price was raised against the dollar by 69%.

Meanwhile this week’s rally in platinum and palladium has been spectacular at 8% and 7% respectively.

Next week
Monday. Japan: M2 Money Supply.
Tuesday. UK: CPI, Input Prices, Output Prices, ONS House Prices. Eurozone: ZEW Economic Sentiment, Industrial Production.
Wednesday. Japan: Capacity Utilisation, Industrial Production. UK: Average Earnings, Claimant Count Change, ILO Unemployment rate. Eurozone: Trade Balance. US: PPI, Retail Sales.
Thursday. Eurozone: HICP. US: Initial Claims, Net Long-Term TICS Flows, Capacity Utilisation, Industrial Production, NAHB Survey.
Friday. US: Building Permits, Housing Starts.

Alasdair Macleod

Head of research, GoldMoney

Alasdair.Macleod@GoldMoney.com

Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online.

© 2014 Copyright Alasdair Macleod - 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.

Alasdair Macleod Archive

© 2005-2022 http://www.MarketOracle.co.uk - 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