Gold Historical Movement
Updated
We still waiting this triangle to breakout. I personally looking for Long-Buying entry once it break upper line and pullback. This thing still have room to move to 2100 area or even higher before making dramatic retracement.
Note
Given the break of the 2011 peak at 1923 and the subsequent drop back to 1900 before rebounding again, 1900 is clearly a nice round support level now. Another test of this level is a high probability, imho.The most recent leg of this rally to a new all-time-high kicked off once we held support at 1790 and broke resistance at 1830. This makes 1825 and 1790 support levels to watch for should we break below 1900.
Gold has been in a rising wedge pattern since the start of the year, and the bottom of that wedge is currently around 1830 and rising. If we break that, then 1825 and 1790 need to hold to confirm a false breakout to the downside, then up we go again. Through 1790 and then 1750 must hold to avoid a deeper dive.
Note
At this point, given the strength of the uptrend and the fact that Gold buyers are clearly focused on the bigger picture of money printing and the growing risk of hyperstagflation, we need to focus on support levels for dips and assume they will hold until broken. A strategy of buying the dip near these levels by adding a position and placing a stop below each support level or simply averaging in given the long-term outlook makes sense in this environment, but how you invest in this bull market is up to you.Technical indicators remain extreme overbought, sentiment is still euphoric, and the banks remain significantly short. That said, we must respect the trend until the trend is broken and focus on the support levels that, if broken, suggest a change in trend. At the risk of stating the obvious, unless they are broken, they are buying opportunities.
Only a break of 1670 followed by a lower high <1975 suggests a major trend change. This is highly unlikely at present and only increases in probability if we break 1750, imho. At the same time, the risk remains that Gold goes sideways to down over the next couple of months and corrects the extremities outlined above, but beyond that, I am only looking up to even higher highs. This is buy-the-dip bull market, imho.
A few quick words on the DXY and real yields given their near perfect inverse correlations to Gold and that the currency and bond markets make Gold look like a rain drop in the ocean.
Note
While downside risks remain, most notable being a sharp drop in stocks, the trend in Gold and Silver has been bulletproof to this point. Therefore, unless we break 1900 in Gold and 22 in Silver, the trend must be respected. However, if support is broken and we see a deeper dive, manage your positions, respect your stops, but don’t jump ship altogether because whatever the low is, you are unlikely to see that price ever again. This is a buy-the-dip market. Once the Fed steps back in—and they will, by blowing up their balance sheet—and the U.S. Treasury sends in the currency bombers ahead of the elections in November, Gold, Silver, and the miners, especially the junior Silver miners, will truly explode beyond belief, imho.Note
I am still anticipating a decent pullback, but now from much higher than anticipated levels. My expectation was that we would get the pullback first and then explode higher, but the market had a different agenda. The metals and miners exploded higher in a matter of weeks before (instead of after) the forecast reversal. But I still expect such a reversal to play out, to set us up for the final rally well into 2021 before the next big drop occurs. So there will be plenty of opportunities to buy the dip in the future.Note
That said, as I stated repeatedly, wait for a break of support for a confirmation that the pullback has begun. Back then it was 1750 Gold. We never went below that and instead skyrocketed higher. Today I will provide the levels to watch as a signal that the short-term direction has turned down. These are of course subject to change if the market continues higher. Until we break support, the trend remains our friend and the trend is clearly up.Note
However, there are some warning signs that we should be mindful of that this rally may be running out of steam very soon. The primary one being that we are now at overbought levels exceeding the 2011 peak records. While we know that price has already surpassed the peak in 2011, indicators such as the RSI and MACDs are now also above those 2011 record levels. It was those extremities that signaled the ensuing 50% drop. With this in mind, it is worthwhile to compare the two periods in order to gauge where we are.Note
The major caveat to the 2011 scenario is that this time is different, and loathe as I am to say it, it may be true. A crash in the dollar that leads to the end of the greenback’s role as the global reserve currency would be a seminal event and certainly outweigh any concerns about technicals, sentiment, and positioning. The asymmetric risk to the downside in real yields if nominal yields remain capped is another game changer. While this time may be different, I am not sure we’re there yet. Indeed, the dollar is overdue at least a healthy bounce before heading lower again. The “This Time IS Different” argument makes more sense medium and long-term, meaning a reversal following extremes not seen since 2011 is still possible, even probable.Note
At the risk of avoiding confusion, allow me to make this crystal clear: While anything is possible in the markets, as we have just seen, I am not expecting a drop anywhere comparable to that which occurred post the 2011 peak, but a 10-15% pullback before we head up to higher highs in 2021 is likely. For this drop to occur, key support levels must be broken first. In the meantime, we could have one or two more negatively divergent higher highs before the correction begins. Should that occur, the support levels to watch will likely rise too.Note
The first support level to watch in Gold right now is 2000, but the far more important one is the 1880-1900 area. Below there opens up a move back down to 1750 or 1670. Once again, I don’t recommend anyone short a bull market, but for those waiting to buy the dip, these are the levels I’m watching as a springboard for even higher highs in 2021. But until or unless support breaks, the trend of higher highs and higher lows remains your friend.Note
Gold and silver just experienced a stunning week, in which they surged higher based purely on real, solid fundamentals—and truly spectacular gains are yet to come.This stands in stark contrast to the truly mind-boggling actions seen over the last few years in the broader markets, whose gains were largely based on illusions, huge injections of fiat money, debt creation, and all around tomfoolery.
It is going to take time for people to adjust to this reality, to understand that the rally in both gold and silver bullion is based on overwhelmingly strong fundamentals, as it has been so long since the financial world has operated in such a manner. However, once this change in mindset occurs, we will experience one of the greatest bull markets this world has ever seen, with precious metals taking off to what some would believe unobtainable levels based on today's pricing.
This week’s trading action in the metals was a just a sample of what is to come. Both metals leapt to new levels, as I predicted they would after breaking through key resistance levels just a few short weeks ago, carried higher first by true fundamentals, then propelled even further by the Wall Street algorithms, with both feeding upon the other in a revolving cycle.
However, as stated before and as we are seeing in today's trading action, pullbacks will occur, and this is a good thing. We do not want a runaway breakout, a straight up parabolic rise such as we saw during the Bitcoin mania, as that leads to weak hands and an inevitable crash lower.
A steady, healthy increase higher with new "floors" being set is what we want to see, as that will ultimately result in longer term, more sustainable gains, with more stronger hands staying with precious metals as they inevitably climb higher.
This pullback in precious metal prices comes on the heels of a strong payroll numbers report, as 1.76 million jobs were added according to official reporting by the Bureau of Labor Statistics.
However, this data is lagging and may be short lived, as already more and more states are imposing renewed lockdowns due to the resurgence of COVID-19 in many locations.
Even so, a return to a strong workforce, which is coming, will not change the fundamentals for precious metals in a meaningful way in the long term, as the historic amount of debt creation and fiat money printing that we have experienced since the pandemic began is not simply going to erase itself.
Chaos will be the name of the game, with precious metals moving higher to adjust and account for this increased risk to the system, adding even further to an already rapidly-accelerating bull market.
Don't believe me? Just wait and see. Time will reveal all.
Until then, stay safe and as always, keep stacking.
Note
This newly created "money" is out there and is not going away. Gold and silver bullion are accounting for this, and they are ultimately going much higher as a result.This will not change. It will only accelerate as we move forward and more and more institutional investors join the ranks of Central Banks, buying gold hand over fist, hopping aboard the train, hoping to ride the strong fundamentals of precious metals higher until a true blow off top occurs.
Note
From delusional eophoria to... complete silence.This pullback in metals and miners is a gift. Looks like 5 ways down complete. Let’s see if we get 3 up next, then 5 down for the bottom. Alt is we go straight up from here but less likely imho.
Either way, higher highs ahead imo
Note
The bigger the rally, the harder the fall, which is why a correction sooner rather than later would be best. Timeline for pullback Aug & Sep, and specifically NOT to short a bull market but wait to buy the dip, then rally to new highs thereafter. In answer to when we bottom in Gold & Silver, I've provided the levels and fundamental factors I'm watching, but sentiment at peaks and troughs is key. Market was euphoric at top, so they'll likely both bottom when everyone is looking south, then up, up, up we go again.
Related publications
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.