Each week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.
After completing a solid week of gains, the August Gold futures awaited the outcome of elections in Greece. Sunday night brought positive news early after the Greek vote was finalized, but the euphoria wore off quickly following news in Spain regarding high borrowing costs and bad loans that plague the future of the Spanish economy. Traders were buyers in most sectors early in the overnight session, then heavy sellers as we near the open of the US equity markets. The US Dollar and the Euro have already traded in very wide ranges over the last few hours.
Now that the Greek vote has passed, traders will look for clues this week from Los Cabos, Mexico where representatives from the G20 summit are in session to discuss the European issues that have affected the market so heavily over the last few months. Additionally, the US Fed will meet this week and deliver a policy statement that some traders hope will hint to some form of easing.
Gold traders that have defended long positions or added to their long positions last week are hoping for supportive language from the G20 Summit coupled with US Fed participation to keep Gold underpinned.
The chart above shows the daily chart of August Gold futures. I pointed out the Gold’s recovery last week after a two thirds retracement from the $1642 high. A good sign for Gold came three trading days ago when it closed above the overhead resistance trendline (in blue) that had been Gold Bugs nemesis for months. In early May and early June, the futures closed above the same line, but only for one day before sinking below again the very next day. Closing above this trendline for multiple days is a good start for technical traders that are bullish, but I believe they will be much more comfortable if prices can carve out a new high and close above $1642 an ounce.
I also pointed out that last night’s selloff ran into firm support at the same trendline that was once resistance. You can see that today’s low never broke the line and indicates that Gold prices are still poised to continue last week’s rally. Until the Gold prices close below this proverbial “line in the sand”, I believe traders will continue to hold long positions and or buy pullbacks. This will not be an easy trade for Gold buyers if the Euro maintains this type of weakness and drives the US Dollar higher, but this week’s news can provide the catalyst that will bring Sunday night’s early euphoria back to the trade.
Overall, I still believe that the market will see higher Gold prices throughout this year. My bias is based more on the fact that global economic woes coupled with massive amounts of new currencies being printed around the world, should provide “flight to safety” traders enough reasons to maintain bullish positions in Gold. On a day to day basis, especially over the next week or two, we should expect continued volatility as the world awaits very important global economic news. Once this news is final, I expect a more predictable trade.
If you have any questions or comments, please feel free to contact me directly at my office email
bb****@lo*************.com
or by phone at (888) 272-6926. I will be happy to hear from you.
Thank you for your interest,
Brian Booth
Senior Market Strategist
888.272.6926
This week's price action in Gold will be extremely important to follow. Keep an eye on the technicals on the daily chart.
This week's price action in Gold will be extremely important to follow. Keep an eye on the technicals on the daily chart.
There are sooo many out there saying "it's a bubble" as they only factor in one observation, that being of price. That is truly the only reasoning, turn on a radio talk show from Dave Ramsey, Clark Howard and more and you will hear how it's indistinguishable from tech in 1999 or real estate in 2006. Never mind that those guys never called tops on those, that's another story. It's the same mentality that we saw from Barton Biggs, Garzarelli, Prechter and others in the early 90's swearing that the dow was climaxing in the biggest bubble in history because it just hit 2,000. If gold really has been a bubble to date, it would be the only one in entire recorded history that no one has participated in or owned. Few of your friends of family own any, total global equity holdings for gold are less than 0.5%. Yeah, that's some bubble.
A good asset to hedge bets on gold is bitcoin. Its not correlated with the global markets and not vulnerable to all the paper price manipulations. Bitcoin is like a "digital gold", worth a look..
No I want Physical Gold not promises , it is all this paper gold that is manipulating the Gold price .If you want it you must own it . If all call for there physical Gold ,you will see the Rats scatter and the Gold price go to where it should be $ 10,000 plus . But the time is coming very soon .
Get ready for GOLD going North for a long time ,look at your chart history for July every year ! You will not see Gold at these prices again .BUY .. BUY .. if you have the money not the Credit .
Is Gold Money Ron Paul vs FED :
http://www.youtube.com/watch?v=2NJnL10vZ1Y&feature=related
My analysis suggests that it is too early to say that gold would go higher. I would say that if it gets to 1650 then we can buy it with target at 1700. However, now it can also easily reverse and make another swing lower.
Well spoken TMO. I suppose that many on this website expect the Euro to implode. As ridiculous as it seems, the dollar will be a safe haven when that happens. A rush to the dollar could precipitate a crash in gold prices. The current price ain't bad considering that planet Earth is awash in debt, but I think waiting is the best policy now. How about other preps such as food, water, land band-aids?