An Update on Gold Technicals

An Update on Gold Technicals

We saw a notable increase in gold this week, with it increasing by 1.7%, or $21, to reach $1279 at the close of New York Comex on December 22nd. This increase, along with our recent updates on gold and its current and historical price fluctuations, has inspired us to provide you with a technical update on the long, intermediate, and short-term looks for gold.

In the Long-term

Taking a look at the long-term view, gold is looking good as we observe the downtrend retest underway since September. The graph here evidences a perspective from 2011 to now, which shows the peak of $1923 an ounce. If you take a look, you can see a clear, linear downtrend through the middle of this year, which was broken in August. The green shaded area on this graph shows the testing the market did to new buyers, to see if they would remain on the same track.

ValueWalk’s August 2021 Hedge Fund Update: Point72 Suffers Loss; Hedge Fund Assets Hit $4 Trillion

Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Point72 Asset Management losing about 10% in January, Millennium Management on a hiring spree, and hedge fund industry's assets under management swell to nearly Read More

In the Intermediate-term

The past week has seen a number of strong rebounds in mining, a sign that we have seen before that promises sustainable advances in gold. This rebound occurred in the midst of the December low and the rate hike announced by the Fed two weeks previous. All of these signs alongside the possibility of a decreasing US dollar and bonds, it tells us to believe that the low for gold’s retest is now.

In the Short-term

We have taken the following information from our trading desk, which takes into account intra-day gold movements. This specific graph shown below references those since the peak reached in September. The most important information to take away from this graph is:

  1. The blue triangle was broken in the first week of December, which produced a $1240 target for gold that was reached on the 13th.
  2. Once a triangle such as this one is broken, we should see resistance near the apex of it. Here, we are predicting resistance around $1285, plus or minus a few dollars, during this recovery.
  3. Following this resistance, we expect gold to retreat and find a help in the Minor Support region, shown here in black, within the first few weeks of January. This would be seen in somewhere between $1260 and $1265 on the retracement.
  4. If gold is unable to remain between $1260 and $1265 on any retracement, then it becomes more likely that the final low will fall even lower than that reached in December of $1236.
  5. If we assume that the Minor Support will remain, then we can predict the next increase to occur around the end of January above the apex of the triangle, around $1300 to $1305.
  6. From this Minor Resistance, it is likely that gold will once again retreat back down to $1275, plus or minus $5.
  7. Right now, it looks likely that during Q2 of 2018 there will be a final advance, breaking the Minor Resistance, and gold will reach the $1350 to $1378 zone. At that time, we will be able to make more long-term predictions.


Gold: A Summary

As previously predicted, gold has formed a crucial low, and it is from here that the increasing trend will grow, lasting at a minimum of 12 to 18 months. We expect $1260 to hold as the low. If a new low is reached, that means a lower point was required for the current retest. There is absolutely no reason for gold to sink below $1205 in this model.

Some small waves that correlate with short-term support and resistance will show us what gold’s movements will be for the first part of 2018. Although to uninformed observers these may appear to be random movements, they will likely correspond to the zones shown above. Once a weekly closing sees $1305 topped,  gold should quickly challenge the highs seen in 2016 for the third time, and once that occurs, the next advancement trend will last into the $1500 area at the very least.

Christopher Aaron,
Bullion Exchanges Market Analyst

Christopher Aaron has been trading in the commodity and financial markets since the early 2000’s. He began his career as an intelligence analyst for the Central Intelligence Agency, where he specialized in the creation and interpretation of pattern-of-life mapping in Afghanistan and Iraq.

Technical analysis shares many similarities with mapping: both are based on the observations of repeating and imbedded patterns in human nature.

His strategy of blending behavioral and technical analysis has helped him and his clients to identify both long-term market cycles and short-term opportunities for profit.

This article is provided as a third party analysis and does not necessarily matches views of Bullion Exchanges and should not be construed as investment advice

No posts to display