Gold - Has Not Lost It's Glitter Yet.
In my last Gold chart I published I gave 1100 zone or little lower as possible area where significant low would form. Then subsequently I updated with saying that I am reducing my downside expectation and would be willing see low form even above 1100. Please check these for background.
Many of course would dismiss these comments as they maintain the view of continued weakness for gold.
I am very intrigued that most analysts and institutions were expecting gold to continue higher and from a new high above Nov 2011 when prices were around 1500. I have in my previous charts maintained that would they would be disappointed and once 1500 gave way we could be looking for 1300 and then to sub 1200.
Many could have used fundamentals and their extensive knowledge to support their views noted above.
However those bulls were severely tested in their resolve as gold continued its relentless decline. Even the most notable Bulls such as John Paulson the Hedge Fund Manager reputed to have made billions from his deal in toxic assets started to sell down his gold exposure and in mid 2013. Similarly, another successful Fund Manager in UK started to conclude that gold has no chance of recovery anytime soon having held his position all the ways from high, so in Mid 2014 considered it is wise to reduce his exposure to Gold.
Drop in inflation expectation and Dollar strength has not been supportive of gold going higher. That now seems to be perceived wisdom.
We might not have seen classic capitulation you often see at the low by climatic drop in price accompanied by massive volume. This makes it hard to make a call on Gold.
Nevertheless, the above high profile bulls along with now ever increasing bears calling for gold dropping to sub 800, suggests to me that it is time to take look at possible bullish move for gold to at least 1500 or retest the Nov 2011 high.
My Elliott Wave counts suggest to me the Nov 2011 high was wave (iii) if correct then we could have completed wave (iv) and now poised to progress in (V) which could at least retest Nov 2011 high. If not then we might retrace 50% of the overall decline and 1500 looks ideal.
Technicals:
1. Bearish sentiments as noted above
2. RSI divergence at potential support level.
3. MACD potentially bullish crossover.
4. Move down from Nov 2011 high appears to be double zigzag with most recent congestion prior to last leg was triangle. Normally the move out of it is terminal (though the minor 5 waves out of triangle looks relative small). Therefore, whilst happy to take this as favouring bullish move (some caution is warranted)
4. Gold/Silver ratio chart suggest potential bottom for both could already in place. See separate chart.
5. Timing wise not significant but notable is that the move of 1999 low to Nov 2011 high took 144 monthly bars and 72 bar for move from Nov high to recent low, ie 50%.
6. See intraday chart which again whilst not conclusive suggest we have minor wave (i) in the form of rising wedge and retracement for wave (ii) are complete. This has happened when Dollar was particularly strong. So if correct we should move strong above 1250 to give conviction to our overall bullish view.
Conclusion:
Even if we are premature in suggesting the low is in, I would not short gold anymore as it become too risky. Rather I would now actively look for confirmation of long trade.
As always, please do your own analysis before making any trade plans. select to follow me and the chart for notification of any future updates. If you like my analysis, indicate this with thumbs-up and comments. If you have alternative view please feel free to share this with details for all to learn from.
Thank you for taking the time to view my analysis.
DanV
Many of course would dismiss these comments as they maintain the view of continued weakness for gold.
I am very intrigued that most analysts and institutions were expecting gold to continue higher and from a new high above Nov 2011 when prices were around 1500. I have in my previous charts maintained that would they would be disappointed and once 1500 gave way we could be looking for 1300 and then to sub 1200.
Many could have used fundamentals and their extensive knowledge to support their views noted above.
However those bulls were severely tested in their resolve as gold continued its relentless decline. Even the most notable Bulls such as John Paulson the Hedge Fund Manager reputed to have made billions from his deal in toxic assets started to sell down his gold exposure and in mid 2013. Similarly, another successful Fund Manager in UK started to conclude that gold has no chance of recovery anytime soon having held his position all the ways from high, so in Mid 2014 considered it is wise to reduce his exposure to Gold.
Drop in inflation expectation and Dollar strength has not been supportive of gold going higher. That now seems to be perceived wisdom.
We might not have seen classic capitulation you often see at the low by climatic drop in price accompanied by massive volume. This makes it hard to make a call on Gold.
Nevertheless, the above high profile bulls along with now ever increasing bears calling for gold dropping to sub 800, suggests to me that it is time to take look at possible bullish move for gold to at least 1500 or retest the Nov 2011 high.
My Elliott Wave counts suggest to me the Nov 2011 high was wave (iii) if correct then we could have completed wave (iv) and now poised to progress in (V) which could at least retest Nov 2011 high. If not then we might retrace 50% of the overall decline and 1500 looks ideal.
Technicals:
1. Bearish sentiments as noted above
2. RSI divergence at potential support level.
3. MACD potentially bullish crossover.
4. Move down from Nov 2011 high appears to be double zigzag with most recent congestion prior to last leg was triangle. Normally the move out of it is terminal (though the minor 5 waves out of triangle looks relative small). Therefore, whilst happy to take this as favouring bullish move (some caution is warranted)
4. Gold/Silver ratio chart suggest potential bottom for both could already in place. See separate chart.
5. Timing wise not significant but notable is that the move of 1999 low to Nov 2011 high took 144 monthly bars and 72 bar for move from Nov high to recent low, ie 50%.
6. See intraday chart which again whilst not conclusive suggest we have minor wave (i) in the form of rising wedge and retracement for wave (ii) are complete. This has happened when Dollar was particularly strong. So if correct we should move strong above 1250 to give conviction to our overall bullish view.
Conclusion:
Even if we are premature in suggesting the low is in, I would not short gold anymore as it become too risky. Rather I would now actively look for confirmation of long trade.
As always, please do your own analysis before making any trade plans. select to follow me and the chart for notification of any future updates. If you like my analysis, indicate this with thumbs-up and comments. If you have alternative view please feel free to share this with details for all to learn from.
Thank you for taking the time to view my analysis.
DanV
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