Monthly charts show major price development and are crucial in determining the long-term trends. It is slow to change and I update it once the price reaches the important level or makes a breakout or reversal. The last time I updated the monthly chart was last August when the price reached the multi-year trendline resistance.
I had assumed three possible scenarios of price action and the least interesting second scenario of consolidation plan worked. I had set the margins of consolidation within the $1100-1400 range and some readers thought it was too wide, but as you can see now it played out perfectly – the actual range is $1122-1367 for the past period.
The trendline resistance falls lower and lower in the long run and now the price meets it again. That’s why added an updated monthly chart below.
Chart. Gold Monthly: Crossroads
Chart courtesy of tradingview.com
This time we have the same situation as in the past year. Last July the price had tried to push through the black resistance line, but failed and there was hope that in the next month the breakup could be done and we all know what happened next. Last month the price also tried to overcome the barrier but failed. Nevertheless, the hope is still there as always in such situations. This month’s candle tells us that the price first dropped down from the open at $1267 to $1214 low and is now reversing losses and is yet to cover them all.
Here are three new scenarios based on the chart structure. This time I will start with the positive plan, which implies the breakup of the resistance as highlighted by the blue upwards arrow, which points at the 50% Fibonacci retracement level ($1483). I came to this outcome calculating the distance of the price growth from December 2015 ($1046) through July 2016 ($1375) and adding the result ($329) to the previous low established in December 2016 at $1122. The target is set at the $1451 level, which is very close to the above-mentioned Fibonacci level. I added an RSI subchart to bring to your attention that the indicator is above the 50 level and this could support the breakup.
The second scenario again as in the last update plots the time-consuming and patience-trying consolidation. This time I think that the range could be fixed within the $1040-1340 levels between closest extremes.
And the last scenario is the continuation of the downtrend, which is contoured by the black converging trendlines. The red downward arrow points at the area below the psychologically important $1000 mark. The distance of the move from the peak of August 2013 ($1433) down to the bottom of December 2015 ($1046) is equal to $387 (almost the same as in the first scenario). If we subtract it from the top of this April ($1295) then the possible target could be set at the $908 mark and it perfectly fits the support touching point on the chart.
Dear readers, please share your opinion in the vote and comments below. Monthly updates are rare and I would be grateful for your feedback.
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Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
Probably, money will mostly go to stocks, and this factors looks stronger than other factors. So bullish trend for gold looks doubtful in long perspective.
Suggest you use the term "breakout" instead of breakup.
"Breakup" generally has negative connotations in the English language and other uses altogether in financial circles.
Yep, with the dollar sliding hard, they knocked gold right back under $1270, free markets?
I have about $8000 in gold, silver and platinum. If you don't like these metals for weathering the coming financial storm, what do you like? Financials? Telecom? Oil? Stella-Jones? Cash?
PM miners, at their lows right now.
The only reason there is resistance is because of the NEVER ENDING manipulation to keep it pegged below $1270. I mean come on, how blatantly obvious can it be...every time there is the SLIGHTEST rise in the dollar, gold is slammed but, when the dollar crashes back down even to election night lows, gold rarely recovers it's loses.
So long as stocks remain bullish we'll consolidate waiting for the next change.
And then again.........
There is some interesting potential based on political uncertainty - There is an obvious effort to raise a single finger to the voters and the constitution and impeach Trump - so future political uncertainty is inevitable at this point!
And we know how the markets deal with uncertainty!
(I don't want to hear any cr4p about the comment - it's just a statement of the facts; If there was anything found it would be LESS uncertain, and the markets know how to deal with bad news or good news.)
Breakup
Consolidation
Downside
None of the above ....But Volatile, moving both sides ,at least in next 2-3 months -5-7 % range
now i know i should buy gold
gold rush is on
Higher high, and higher low formation. Breakup
Dear Aibek,
If you want to find some really interesting analysis of Gold, keep your eyes on Bitcoin movement, I think, some big conspiracy taken place to manipulate Bitcoin, and gold is directly related very closely with Bitcoin, and now this co-relation will effect on gold as well Currencies world wide.
Breakup reasons
1. Dollar will continue to fall as Trump admin wants to grow econ with weak dollar.
2. Gold commercials not motivated to sell at these low price levels.
3. USA fed budget deficits will continue at very high levels for 3+ more years.
4. USA economy risky with high consumer debt levels.
5. USA economy near max employment, hence inflation.
6. Trump admin bringing jobs back to USA is likely to be inflationary.
7. Continued regional wars and threat of more wars is inflationary.
8. China and international banks will continue buying gold.
9. INO monthly spot gold chart:
two higher lows;
2016-01 approx. was $ 1050
2017-01 approx. was $ 1125 (higher low !!!)
2016-07
big rally in between $ 1375.
Higher bottoms/lows; looks so bullish.
Gold bearish factors
01. Plenty of crude oil around: Deflationary and thus bearish for gold.
02. Stocks are in bullish mode.
Potential gold investment money competes with stocks.