Tag: Gold analysis

Inflation And Ukraine Crisis Cause Gold To Surge

Posted on by The INO.com Team

Gold prices have been moving to a higher value at a pace not witnessed in quite some time. On Monday, gold futures basis most active April 2022 contract opened at $1920 and closed at $1900 after recovering from a low of $1893. On Tuesday, gold prices gained over $40 and accelerated the defined uptrend that began the first week of January. The rally has continued today.

As of 4:22 PM EST on Friday, April futures are currently up by $39.40 (2.00%) and fixed at $1974.90, which means that gold gained $74.90 this week, resulting in a net weekly gain from Monday's low to today's current price of 4.3264%.

When added to the price advance of January 31, that accomplishment reveals a profound fact. In just over one month (January 31 to February 4), gold prices have gained $194.90, a percentage gain of 10.94%. Continue reading "Inflation And Ukraine Crisis Cause Gold To Surge" →

Gold Update: Handle Is Broken, Cup is Next, Target $2,800

Posted on by Aibek Burabayev

Back in October 2020, one of our readers suggested that the famous Cup & Handle pattern could have been built in the gold chart. I have checked his idea and visualized it in that very chart below from the past.

Gold

At that time, the main element Cup had already been shaped (blue). The final part of Handle was yet to appear. I highlighted the hypothetical trajectory with an orange zigzag in the declining red channel.

Let's see what is going on in the gold futures monthly chart below to check if that assumption came true. Continue reading "Gold Update: Handle Is Broken, Cup is Next, Target $2,800" →

Gold Has Stalled At Equilibrium

Posted on by Aibek Burabayev

Back in April 2020, in my post, I had surmised "Gold Could Fly Over A Helicopter Throwing Money" as the fourth round of Quantitative Easing (QE4) had started a month earlier in March 2020 with an initial pledge to inject $700 billion via asset purchases to support U.S. liquidity. The price of gold was $1,681 at that time.

We all knew that the printing press should push gold prices higher. I tried to calculate the possible target area for the gold price using comparative analysis of the past period, and then I set the range of three goals: $2,000-$2,200-$2,540. Your reaction had come as follows.

Gold Poll

The ultra-bullish $2,540 target dominated the ballot. However, the second bet with a more realistic $2,000 target was the closest yet as we saw the all-time high at $2,075 in August 2020. I guess I found the reason for this outcome in the monthly chart below. Continue reading "Gold Has Stalled At Equilibrium" →

HUI Technical Status And Gold Stock Fundamentals

Posted on by Gary Tanashian

A review of the situation in gold stocks. It is, in essence, a year ago that Warren Buffett ill-timed his entry into the gold stock sector, unwittingly calling a top to the post-crash rally and signaling the start of the 2020 inflation trades, which did not include gold stocks (for logical reasons, as belabored in NFTRH and at NFTRH.com over the years). Increasing the view that ole’ Warren was playing contrary indicator last summer were the usual gold perma-bull suspects coming out immediately after with bullhorns a blaring as we noted in real-time on August 17, 2020: Buffett Buys a Gold Stock!

In the scope of the entire correction, as the bids rotated out of the precious metals and to a lesser degree growth/tech stocks into value stocks and cyclicals (including commodities) the inflation-instigated reflation trades hit stride, and gold stocks were sent on a long decline. Again, if you tune out the perma-touts and think rationally, the miners were only doing what they should do (see below).

There were two false breakdowns, the second of which sparked a strong rally. We also caught Mr. Buffett for a contrary signal to that rally on February 17, 2021: Buffett Pukes a Gold Stock!

The rally terminated at a key resistance level (as plotted well ahead of time as a caution zone in NFTRH) and here we are with HUI below its down-turning SMA 50 and SMA 200 (which needed to hold as support in order to maintain a constructive view), back in the downtrend channel (actually the Handle to a still bullish big picture, which is beyond the scope of this post) and the near-term bounce that I had been expecting has finally arrived after the rude interruption of an unexpected lower low.

That low came off of positive RSI and MACD divergences and here we are, on the bounce with the channel’s upper line, the down-sloping moving averages, and a clear lateral resistance area all taunting… “‘C’mon Huey, we dare you!” Continue reading "HUI Technical Status And Gold Stock Fundamentals" →

Update: Gold Mining Fundamental Macrocosm

Posted on by Gary Tanashian

Gold miners require a unique macroeconomic backdrop.

When gold-stock bulls complain about a “smackdown,” a “hit,” or a “smash” against the poor gold-stock sector, what they should be thinking about is what a relatively small market the gold stock universe is compared to the multitude of galaxies populated by cyclical and risk on stocks and commodities and the massive bond market. The gold stock sector’s noise to trading volume ratio must be far and away the biggest bull market on the planet (I know because I am part of it :-)).

And once in a while, the sector actually warrants all that noise. Like in 2001 when markets were beginning a bear phase, and economies were faltering, like in Q4, 2008 when gold stocks were crashing to unwind previous inflationary excesses, leading stocks and commodities into a terrible crash and rebounding first. Like in March of 2020, when the miners crashed and ‘V’ bottomed to lead what is to this day an ongoing economic recovery born of inflation, gold and gold stocks first sniffed out.

And that is the rub. Personally, I have been favoring the prospect of a strong bull market (target: 500) after initially projecting an A-B-C upside correction target of 375 in 2019, which we put in the books at 373.85 last August. But in order to continue favoring an ongoing bull market scenario, the macro fundamentals must play ball, and play ball they have not since last summer. Hence, the A-B-C upward correction and ongoing bear market scenario gains strength with each passing month of positive economic activity, regardless of the inflation it was created with.

hui

Enter once again the Macrocosm because it is time for a reminder to myself, if not you, that the macro must rotate negative in order for the gold-stock sector to be anything special. Speaking of rotation, it has been rotating alright, but with yields and inflation signals fading that rotation is not into a deflationary situation that would produce a big gold-stock buying opportunity but is instead something of an interim Goldilocks scenario (easing inflation expectations, firming USD, Tech and Growth bid up, etc. while the economy remains okay). Continue reading "Update: Gold Mining Fundamental Macrocosm" →