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
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Price is Nearing Record Low – When to Buy?

Commodities / Gold and Silver 2015 Dec 02, 2015 - 02:49 PM GMT

By: Nicholas_Kitonyi

Commodities

The price of gold has been under intense pressure over the last few weeks as expectations about the increase of the U.S. interest rates continue to rise. The Federal Reserve is expected to make an announcement soon with regard to this matter and several financial reviews believe that an uptick could come as early as this month.

This has helped to push the price of Gold close to its 5-year low of $1,056. However, in the last few days, the price of the yellow metal appears to have hit a turning point with some investors convinced that the expected interest rate hike has already been tacked into the bin.


On the other hand, there is also a school of investors who believe that there could be delays in increasing U.S. interest rates as the country’s current economic recovery numbers continue to draw mixed opinions from analysts.

This scenario is slowly building a bull case from a fundamental perspective while the technical side of things also continues to point towards a rebound in the price of gold as we edge closer to the end of the year.

Now is the time when bullish gold traders via various platforms such as Trade-24 would be looking to pounce as the rest of the world continues to assume that a strong USD and a promising US economy would keep the yellow metal pegged to the floor.

Technical analysis

At $1,066 an ounce, the price of gold appears to be set for an upward run that could take it towards the $1,080-$1,100 levels going into next year.

Now, as illustrated in the gold price daily chart above, the price of the yellow metal appears to have touched the lower Bollinger band, which in most cases would suggest a strong case of a rebound.

In addition, the Chande Momentum oscillator indicates that trading activity has already moved from the region of oversold to normal trading zone in the daily chart, which suggests the current upward movement in price could continue for the next few days or weeks.

The daily chart can be used to determine the immediate direction of the price of gold, but in order to confirm this, it is important to look at what the weekly chart suggests.

Now, based on the weekly chart, the price of gold has been on a downward trending wedge since early 2014, albeit with a series of rebounds characterized by lower highs and lower lows. Again, the price of the yellow metal appears to have touched the lower Bollinger band in this illustration which would suggest a possible rebound in the coming week.

Furthermore, gold price also appears to have touched the downward trending support in which case it would trigger an upward rebound.

Based on the weekly chart, the overall movement of the price is still bearish and it appears to have entered the oversold region in the Chande Momentum oscillator once again.

When you look at previous cases when this has happened, the price of gold has mostly reversed to the opposite direction, which would mean that traders should brace themselves for another upward run.

Fundamental analysis

While the most dominant picture in the news is the high expectation of US interest rate hike, recent developments suggest that this could yet play in the hands of the yellow metal.

The price of gold has plunged due to this expectation, but a delay in raising the rate could suggest that things are not as rosy as they appeared from an economic perspective. In fact, there are those who believe that the US could be shooting itself in the foot if it raises interest rates without careful consideration of the likely consequences.

Right now, analysts believe that the price of gold has become so predictable in the recent past rallying during Asian trading sessions and falling during US sessions. This is down to the fact that the USD denominated gold price becomes under pressure when US markets open while gaining strength when they are closed.

However, there are others who fear that a US interest rate hike in December could be followed by an economic slowdown and this could unlock a bunch of unwanted case scenarios. For instance, there could be a rise in corporate loan defaults, a pullback in lending and contagion across asset classes, which could turn the economy to another downward spiral.

In fact, an article published on the Financial Times claims that the downward spiral might have already started even before the Federal Reserve makes its move to tighten economic policy. This means that the US could be making a huge mistake to raise interest rates in which case gold investors could benefit at the tail end of it all.

Conclusion

The bottom line is that the price of gold is approaching multi-year lows, but based on the recent turn of events, it may not reach that level this time around as it appears to have already turned the corner on the daily chart.

In addition, investors appear to be betting too much on US raising interest rates, yet there are those who believe that a rush decision to raise interest rates could send the country’s economy into a downward tantrum, in which case gold bulls would benefit magnificently.

Therefore, it appears that now could be the right time to buy the dip.

By Nicholas Kitonyi

Copyright © 2015 Nicholas Kitonyi - 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.


© 2005-2019 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

6 Critical Money Making Rules