Gold Chart of the Week

Each week will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

Weekly Gold Report (October 15 through October 19)

I stand corrected and I do not mind admitting it. The past few weeks, I have been suggesting that December Gold would see short dips being bought and would likely rally through $1800 an ounce in the near future. We begin this week trading below $1750 an ounce and I am somewhat surprised. While today’s low is seen as a decent support level off of the September 26th price, I am still left questioning whether Gold’s hangover will continue.

Normally I try to fill this report with a review of last week’s fundamentals to explain the trade, but I will spare you the boredom. Here is a “Cliff’s Notes” version of the reports and action last week from the United States, Europe, and China. In the United States, the idea of QE3 (printing US Dollars and purchasing debt) has now officially faded as most markets have corrected the move up. On top of that, the huge Michigan Consumer Confidence number only resulted in a thirty second rally, followed by a selloff to finish the week. In Europe, there is one thing only to report. That is that for the sixth week straight, the market continues to worry about whether or not Spain will request a bailout and allow the ECB to buy Spanish debt and reduce borrowing costs. Thankfully, none of the traders that I know are holding their breath waiting for a final answer from Spain. And in China, the reports continue to be one question mark after the next. So what are we left with? We are left trading technicals in lighter volume that are still driven by HFT programs. I believe that if we do not hear about a formal request for a bailout from Spain soon, that we may have to wait until after the US Presidential Elections before the market environment changes.

Technically, many of the major markets (especially major Currency Futures like the Dollar and the Euro) have been trading themselves into tighter and tighter ranges over the last few weeks. I will be looking for any confirmed breakouts in the Euro and Dollar as indicators for the Gold Trade. Also, the December Gold Weekly chart shows that we begin this week testing an important support from late September. If we break this support level, I will first make sure the selloff was not merely a stop hunt, then decide whether the market will rally from this support or try to test $1700 an ounce in the early part of this week.

I still believe that Gold Futures will trade above $1800 an ounce in the near future. This week will definitely test any Gold Bugs patience, but ultimately I believe the bulls will prevail.

Good luck this week and as always, please feel free to call or email my office with any questions or comments regarding this piece. Also, please keep in mind that Long Leaf Trading is offering lowered commission rates on all new accounts opened in the month of October. This applies to all new accounts, whether Gold is the focus or not. Please contact Brian Booth directly by phone at (888) 272-6926 or by email at [email protected]

Thank you for your interest,
Brian Booth
Senior Market Strategist
[email protected]

15 thoughts on “Gold Chart of the Week

  1. To All,

    Thank you for your replies to this chart and fundamental analysis. Allow me the opportunity to remind you that this article is solely based on analysis and opinion. While I remain bullish the Precious Metals (and have been since the Summer range), I also expect profit taking and occasional pullbacks.

    My analysis of the market does not include specific trade recommendations by design. It is not in my best interest to submit trade recommendations because every investor is different from the next. One reader may have five million dollars in an account, while the next has five thousand. One reader may be a thirty year vet in the markets while the next may be a neophyte or even a novice. One reader may understand stop and limit orders, hedging strategies, technical analysis, etc while the next may only be a one-trick pony.

    The article is written to provide information for traders to keep abreast of the market overall and also includes some of my own personal opinion. Please use this chart and analysis as a guide to formulate your own opinions on the market and if you have specific questions about entry/exit points, hedging strategies, risk-management strategies, or upcoming events that will affect your positions, please contact me directly. I will be happy to discuss these things with you. It is what I do for my customers each and every day.

    Good luck to you all.

    P.S.: Thank you Dennis.

  2. Take your money and buy some good farm land, maybe next to a river, or with a big pond or lake on it.. Then buy some physical gold and bury it there. Then wait 10 years and see what it is worth; in the mean time you could live there, grow your own food, go fishing and swimming, have a good time. And you don't have to look at a computer screen to see if you still have any money or property left. Works for me.

  3. I agree with Mr. Shelby. The world is printing their own currencies in a most Keynesian way which has never worked. What happens when our $16T in debt turns to $20T, $30T? You start shopping using a wheelbarrow to carry the money you need. If you are looking at the micro picture, buy dollars, if the macro picture, precious metals and survival supplies are the way to go. If you have read about recent events, several countries are now trading oil not in dollars but their own currency. Do you think this is a sign the dollar may be in jeopardy of continuing its stance as the reserve currency. What happens if/when the U.S. debtors' decide to sell their U.S. Treasury Bonds? Do you really think the United States is totally isolated from overwhelming debt problems? I, for one, do not.

  4. west+japan solves debt/credit bomb with more debt?....................................not happening.

    entitlement bubble on sovereign debt guarantees gold/silver ends up as only asset left standing.........4-5 years.

    currently----'the better the handle on the 'TA' cup----the bigger the bull run'

  5. simply eye balling that chart pls look at all the tops and bottoms. None, save the last one, was ever comming out of a long "base building consolidation period". From a pure technical point, this makes it different with a better chance to continue. I suspect we'll have a small pennant consolidation pattern before moving up.

    And now about silver, please?

    1. Kara, most triple tops fail, probabilities and backtesting prove it. Will this "triple top" also fail? No one knows. No longer gold season you say? Not true, October is historically not great for the metals, but Nov-Feb. certainly are from historical data.

  6. Gold is under pressure.
    No. 1 reason: International bullion buyers and investors are fearful of buying into a possible counterfeited gold bullion and coins. That is the underlined pressure of late on gold price.



    1. Javier,get your 15 grand next time just do the opposite of what said. I was told to sell or short at $126.00usd now at $154.00usd with P/E over 800.

    2. If you had bought gold coins and held on to them, you wouldn't have lost anything except the opportunity to buy gold at this cheaper price. It is inevitable that the price of gold will go much higher in the years ahead. If you bought futures contracts and over-leveraged, so that you were forced to sell at a loss, then that is your own mistake. If you play with fire, you will get burned. Take responsibility for your own actions. Don't blame the writer of this column. He cannot predict the price of gold day to day any more than you can.

      1. Inevitable Leonard? No markets are a sure thing, sorry to tell you. Probabilities favor higher, nothing more. If it doesn't work out, you better have a plan, most don't have any contingency plans. Not how to protect capital.

    3. Mr.Ramos,
      If you truly get your investment advice from this blog, then I respectfully submit to you that you will lose much more than 15 K in future either by unsavory investment advisors or your own mistakes. I don’t know about your maid, but I do know that until you learn to read stock charts and take charge of your investments, you will continue to lose money. I don’t know the man who writes this blog or his experience or intentions but he seems like a sincere man. I know I would not invest any money because of someone’s opinion. Speaking from my experience it is imperitive that you have a plan in place with entry and exit targets, a stop loss in place and/or a hedge by buying puts or selling calls to protect yourself from ever losing that much money ever again or having to ask your maid for advice. I also know that whether you have 20K or 20 Billion USD, no one likes to lose Fifteen Thousand Dollars. I wish you the best in your future investments Mr.Ramos.

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