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Arguments for lower prices
- Overall Gold still is in a downtrend. US$1,525.00 remains the line in the
sand. Gold will need much more time to break through this heavy resistance.
Only a move above US$1,430.00 will indicate that the trend has indeed changed.
- Gold Monthly Chart: MACD sell signal active since November 2011
(this is extremely powerful and needs to change before one can call the bottom,
but MACD histogram is already turning higher from oversold levels.
- Gold Weekly Chart: Last Friday Gold moved into massive resistance
territory. Multi-month downtrend line around US$1,320.00, the falling upper
weekly Bollinger Band (US$1,347.17) and the 61.8% fibonacci retracement from
the summer highs (US$1,434.00) and December lows (US$1,180.00) at US$1,337.55.
- Gold Daily Chart: Gold has been moving higher for the last 8 of
9 trading sessions. This is strong warning signal that the market is getting
short-term overbought. As well Gold is currently for the fourth day above
it's daily Bollinger Band (US$1,306.39).
- Gold CoT-Data: Long term still at low levels but Commercials have
been increasing their short position and continue to sell into strength.
- Seasonality: From mid of February until end of March the seasonal
window typically is negative for Gold and Silver.
- Sentiment: Many new bullish analysis appeared during the last couple
of days. Kitco is reporting >77% Bulls in it's weekly Gold Survey. Sentiment
data for HUI Gold Bugs is at 90% and shows excessive optimism.
Arguments for higher prices:
- Since end of December Gold has managed to establish a clear series of higher
highs and higher lows. The critical support level around US$1,180.00 is far
away and the price action has a different character than the last three fast
advances which turned out to be just a short squeeze/bear-market rally.
- Gold Weekly Chart: Gold saw the biggest gains within one week since
last July. MACD buy signal is still active and supporting the bulls. RSI
and Slow Stochastic Oscillator still have plenty of room to move higher.
- Gold Daily Chart: As expected Gold went up to the 200-MA (US$1,309.79).
The technical picture has strongly improved. MACD still with a buy signal
while the Slow Stochastic is about to embed (both signal lines above 80 for
more than 3 days..).
- Silver finally exploded higher on Friday (+5.34%) jumping over it's
200 MA (US$21.13).
- Gold/Silver Ratio: Now at 61.39 breaking through the uptrend-line
and it's 200MA. This is very positive as Silver starts to outperform Gold.
- Junior Gold Miners (GDXJ) continue to outperform Gold and are leading
the whole sector now.
- The US-Presidential Cycle is supportive for the next 12 months as
the mid-term election years are traditionally good for Gold and Silver.
- Long term Fundamental: While the public is celebrating 100 years
of Federal Reserve System, the balance sheet of the FED is now above US$4
trillion. The level has climbed by more than US$1 trillion over the course
of 2013 as the central bank continued its bond-buying program launched in
September 2012.
Conclusion:
- Mr. Gold-market has finally and clearly spoken. We are back above the 200-MA
(US$1,309.79) for the first time within a year. Although this is very positive
for the mid-term outlook, I am getting very very cautious for the short-term
now. I think the next move will be to the downside testing the 50-MA (US$1,242.42)
for support. After this correction Gold should continue to move higher and
reach US$1,430.00 until May or June.
- Short-term Gold is at massive resistance and I believe the following two
scenarios have the highest probability for the next couple of weeks:
- 1st Scenario: Similar to Platinum in January Gold will bounce back from
the 200-MA for the next 1-3 trading sessions down to around US$1,295.00.
From here a final move up to around US$1.335.00 to US$1,345.00 is likely.
But the falling weekly Bollinger Band will stop any further price advance
and professionals will sell Gold short above US$1,335.00. With a typical
ABC-correction pattern Gold should then not only move below US$1,300.00 but
correct at least 50% or more likely 61.8% of the rally from the December
lows targeting US$1,245.00 to US$1,265.00 for a bottom. In this zone we can
also find the rising 50-MA (US$1,242.42) which now is strong support but
needs to be tested before Gold really can move above the 200-MA (US$1,309.79).
- 2nd Scenario: Gold opens with a final spike on Monday morning pushing prices
directly towards US$1,340.00. After 8 days of rising prices this advance
is not sustainable and Gold will directly start an ABC correction down to
US$1,245.00 to US$1,265.00 as described in scenario 1.
- I am a long term gold bull and believe we will see much higher prices but
my short-term outlook for the next 2 - 6 weeks is that we will have a consolidation
and correction in the precious metal sector.
- Traders should tighten up their stops and take at least some money off
the table. Experienced ones could even short sell Gold above US$1,335.00
for a swing trade targeting US$1,275.00 with a stop-loss at US$1,350.00.
- Investors with a long term perspective have to wait for the coming correction
to buy physical Gold below US$1,285.00 and Silver below US$20,80. This is
not the time to buy but to be patient.
Long term:
- Nothing has changed
- Precious Metals bull market continues and is moving step by step closer
to the final parabolic phase (could start in summer 2014 & last for 2-3
years or maybe later)
- Price target DowJones/Gold Ratio ca. 1:1
- Price target Gold/Silver Ratio ca. 10:1
- Fundamentally, Gold should soon start the final 3rd phase of this long
term bull market. 1st stage saw the miners closing their hedge books 2nd
stage continuously presented us news about institutions and central banks
buying or repatriating gold. The evolving 3rd and finally parabolic stage
will end in the distribution to small inexperienced new investors who will
be subject to blind greed and frenzied panic.
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