Gold ran back up to the 1308, a nice pullback after the fall from 1325, which I sold previously (see link below). We had some disappointing numbers from the US today, durable goods -0.3% under forecast and Gold had a little sniff and fell back down, we have sentiment at 15:00 a positive response will send Gold back down to the lows and a negative response, will it do any more than durable goods, if it does, it'll be back down sharpish. This is a pullback, I'm bearish Gold, sell!
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Consumer Sentiment -0.8 lower than expected and Gold barely responded, still bearishNote
Some more analysis on why I'm short Gold and an attempt to support Gold strength, or when that might happen.Gold correlates to the US$, Crude Oil and Political uncertainty, in short, it's a hedge against uncertain times, but it doesn't always correlate as quickly as the movement of other assets, we can see this when US$ or Oil moves, Gold takes a lot longer to respond.
Look at this long-term comparison to the DXY and Gold, when they both hit the 200-day moving average they reject it, mirroring each other, but the $ moving much faster. And right now, both have broken long-term trend lines, the $ in a bullish move has broken two and the Gold is on a major confluence zone ready to move down to the next trend line.
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Now look at the correlation as a trading pair, on the monthly time frame, we're at the midline of a symmetrical triangle after major bearish rejection candles off the highs, would you buy Gold looking at that?Note
Let's zoom in, we've rejected inner trend line as well, again would you buy Gold now?Note
The daily chart, would you buy that, with a slow start to the week coming up, what is the probability without further political instability, bearing in mind that Trump and Iran didn't cause a big move higher?Note
Now look at the XAU / Gold correlation (without the additional basket of global currencies). This goes back to the crash, Gold reacted poorly to the Crash, Oil was at $110 at the time and Brexit, Gold moved $6, probably more from global instability and oil down at $35 (it's real value). In 2016, Gold had pulled back to the post-crash 61.8% fib level and has rejected 1380 - 1365 9 times, we never got to $1400, so what does Gold need to be to bring back the buyers, either huge political instability in some form, it goes there now, or, like Oil, it's in a dire need of a pullback to bring back the buyers, in line with the previous rising trend line.
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And now the most important chart, daily chart, look at the highs since the start of 2018 and the reducing volume, we're not even in over-sold territory yet, major divergence anyone?We're south of the 200 moving average right now, we've already broke $1300 to the downside, (I enjoyed selling that from £1345) after Gold held it for 4 months, coming back is not going to be easy with $1270 and $1237 below in a downtrend.
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But here's the important point, a few words, inflation and short-term. We cannot be a bear long term. While the US$ is rising (albeit at a major resistance zone), the prospect of inflation will cause inflation correlated assets to rise, that's Oil and Gold, so we could easily see Gold rise to retest 1325 before going south to these targets, so for that reason, I'm in and out of Gold this week like a sailor in a whore house. The long-term prospects? $1240 before we break $1400.What are your thoughts?
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Bearish open to support the analysis, we're now testing 1297 and below, this will be the hard part, but I think that's a bearish confirmation don't you?Note
We're now trading sideways inside this small range below 1300, a key support area for the bulls, which has been broken through and rejected, and we've already broken down out of the range, price is consolidating and with the very few buyers coming in, I expect another break to the downside towards 1290.Note
Bulls are going for it now.... political instability maybe?Trade closed manually
A seriously bullish move, I've exited the trade at breakeven, there are easier forex pairs out there right now.Note
So it's just going sideways, a lesson to learn "again", if its not hit your stops, leave it alone, divergent at present, declining volume, but I'm not entering there.Note
Another lesson, stay in the trade much longer, my analysis was correct and gold has continued to retreat. What another incredible Month, June will be bigger.Note
Today will be one of those days when trades are trying to find their levels, break levels and support new trends, you can see this in the aggressive moves happening very quickly. It's incredibly important you stay patient for an entry, don't enter to just be in the market and if you've got a trade on a long-term, swing trade, be prepared to see larger sideways movements and therefore don't sit and watch them, don't enter with anything less than a 15m timeframe and preferable a 1h.
Commodities are moving slowly and Gold has continued down towards 1283, I can see Gold back down at 1245, if Italy and Donalds tariffs weren't in the news, for that reason, Gold is slow mover, price is factored in for all this news, so don't think you can be a bull without something majorly serious happening.
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The amount of Gold bulls who state this is going back up.... nope, we've been at 1300 for a long time now, major correction needed. Going back to 1240
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.