Gold short term technical update

From mid March to early may the price of the Comex June gold contract (GCM8) pulled back about 190$ (1038$ > 846$) currently trading around 885$ . Along gold recent weakness there is some USD strength vs some of the other popular currencies such as the Euro , Yen , British pound, Swiss frank and others.

The trend is still down ( as defined by the diagonal line connecting the major top (1038$ at mid March) with the secondary top (~956$ at mid April), But there is a minor uptrend inside that bigger down trend channel which give some chance for the 846$ bottom to hold.

Support levels : diagonal minor trend line , ~876$, ~856$, ~846$, ~817$, ~792$

Resistance levels : diagonal downtrend line, ~897$, ~913$, ~930.5$, ~957.5$, ~977$, ~1039$.

June Comex gold futures (GCM8) 8 hours chart

GGP Update

Dear readers,

In recent weeks the Dow Jones World Index had it's worst decline since 2002.
On the same page the VIX reached the highest point since 2003.




Given recent moves in major currencies (EURJPY 169 – 149, GBPJPY 251-219) gold have been as stable as one can expect from a major independent private currency. This is very encouraging to say the least. Odds still favors higher gold rates more then lower USD index.


Gold daily chart annotated with wave count

Same 1-2 extending
















Silver daily chart annotated with Elliott wave count

Retraced September 2006 – February 2007 secondary advance

Gold, USD & Forex Update

Dear readers,

The USD is looking oversold here and some bounce might be expected. If you add a channel the way I did, you can see that the USD index is at the bottom of the channel. In addition, the USD just tested the psychological important 80 level – this level was rarely violated, ever.


USD Index Daily Chart (note the deep oversold condition of RSI 14)




































Try to avoid shorting the Yen as the crowed count this currency as a weak one. The interest rate on the yen is low and might continue to stay low for some time but the Japanese economy is not a weak economy in my book, not at all.

Particular vulnerable is the EURJPY pair which had already completed or might be very near to complete a seven years rally. A large correction is expected here – take note!

EURJPY Weekly Chart , Elliott wave count. (click to enlarge)





















Gold and silver had a nice rally (as expected) but some significant resistance seen for both. on the other hand gold in terms of Yen and Euro made some advance so the move was not all USD related. If the USD will start strengthening as it might gold can correct some of its recent 47$ rally. Corrections should be seen as a buying opportunity and the June low should hold.

Spot Gold weekly chart annotated with Fibonacci levels. (click to enlarge)

Japan Should Diversify Reserves

Markets normally lead the press…

Japan Should Diversify Reserves, Abe Adviser Ito Says

By Shigeki Nozawa

July 11 (Bloomberg) -- Japan, the largest overseas holder of U.S. Treasuries, should invest $700 billion of its currency reserves in higher-yielding assets such as stocks and corporate bonds, said Takatoshi Ito, an adviser to the prime minister.

The reserves should be managed by a special fund that will gradually diversify into euros, Australian dollars and emerging- market currencies, Ito said in an interview in Tokyo.

Central banks in South Korea, China and Taiwan have announced plans to buy assets with higher returns than U.S. debt, contributing to a 7.4 percent drop in the dollar against the euro in the past year. -source



Long term 27 years Gold / Yen Chart (XAUJPY) Price scale : 10K Yen per Gold Troy Ounce.

XAU, XAG & Forex Commentary

Not much change in the USD price of gold (xauusd) today. Gold futures traded and closed slightly higher but priced in Euro and Yen gold is actually down today.

The Euro made a new all time high vs. the USD, EURUSD ~= 1.3740. Note that pre issued Euro high was EURUSD 1.4750, Long term (30 years) retro perspective EUR/USD chart.

Marginal carry traders capitulated as the Yen rallied strongly. Be careful with that one! , Seems like the carry trade become way over crowded as every one and his dog doing the thing.

Silver up, the high of the day was 13.085 for SIU7 (COMEX September contract)

Silver SIU7 Intraday Chart (2 hours sticks)

Recommended Readings

Individual gold trade this month
By Wang Lan (China Daily)
Updated: 2007-07-04 08:51

The beginning of gold trading by individual investors on the Shanghai Gold Exchange (SGE) later this month is expected to provide a welcome alternative at a time of high stock market volatility. -link

RTS Realtime Systems Group Offers Connectivity To Dubai Gold & Commodities Exchange

03/07/07

RTS Realtime Systems Group (RTS), a leading independent software vendor, announced that the firm is now offering access to the Dubai Gold & Commodities Exchange (DGCX). The move expands the RTS presence in the Middle East and further strengthens its leadership position in electronic trading software, with thousands of user connections to more than 85 exchanges and liquidity pools throughout the world.
-link

Warehouses to help stabilise gold prices

(03-07-2007)
The International Gold Council this year estimates that demand for gold in Viet Nam could reach 70-80 tonnes. A Brink’s Viet Nam representative, Ben Van Kerkwijk predicts in the short run demand will accelerate. - link


GLOBAL EXODUS FROM THE US DOLLAR IN MOTION by Gary Dorsch -link


The Silver Millionaire By David Morgan - link

Positive Reason

Interesting times head as significant adjustments are in the works. Currencies, Silver Gold, Oil, Stocks all in the equation with the most controlled item actually needs to be Interest rates.

Commodities continue to trade with a group and / or individual bias. Generally it might be the case that commodities are the best play as the long term (decades) cycle is probably most favorable for this asset class.

Gold and Silver fundamentals have never been better with global system adjustments seen as a long term positive. Significant amount of shorting taking place and some of it probably un hedged (naked).

Exact timing and finding reasons for the day to day action is tricky.

Gold, Forex

If you look at gold compared to other major nations currencies like Yuan, Rupee, Pound, Ruble, Real, Etc. you can see that some of them have been more strong then others and gold retraced a large amount of time and price . It has long been my opinion that gold will appreciate vs. most if not all national currencies. In terms of some national currencies gold is currently trading at serious discount. For monitoring the price of gold and other precious metals / hard currencies Vs. most national currencies I use FX CHARTS & PLOTS (v2.12)

Gold & the US Dollar

The last time the US Dollar index was around current levels gold was trading almost 250$ lower. In early 2005 a bottom in the USDX was realized and the Dollar climbed 11 points. At the same time gold was initially trading within a tight trading range till breaking out and rallying along the USD.

I have been watching some gold & USDX charts lately, my insights are:

The inverted correlation between gold and the USD is not reliable.

The scenario in which gold and the dollar are both trending higher might repeat again.





Short term bottom seems to be in place (or near) for the USDX. If the Dollar will start to rally soon it might have an immediate negative affect on gold but that will be limited both in terms of price and time.

Euro at All Time High ?

Gold & Silver gained some ground as the Euro makes a new all time high (or is it?)


The Euro was introduced to the world financial markets as an accounting currency in 1999 and launched as physical coins and banknotes in 2002.

source

As explained several days ago, pre issued Euro high was actually higher at about 1.4570$



Long term (30 years) retro perspective EUR/USD chart.

Five Interesting Blogs for the Weekend

• The Elliott Wave Lives ON – Excellent Elliott wave blog, S&P and GLD wave counts included.

• JsMinset – Jim sinclair popular gold blog.

• Well designed and informative - Grace Cheng Forex Blog.

• Advanced XAU / GOLD Ratio Analysis at paint the charts.

• Silver serial commentary and insights at Silver Axis

Gold & Silver Charts

Dear readers,

The price action of gold was somewhat mild recently as the money metal consolidated around its 50 days moving average. The uptrend which connects the October 2006 and January 2007 lows is still intact, additional support levels at the 200 daily MA and a bit above the January low. In my opinion there isn't much conviction yet as if another leg up will begin from here or is further decline might be required. Silver is looking to me a little bit stronger but not much strong either. The HUI is indecisive at best and lately I was bubbling something about the approach of long term buy & hold commodities?

¥ Japanese Yen Long Term Chart Analysis

The Yen Is a hot topic lately and so called "Experts" decided that the Yen is to be blamed for the recent volatility hiccup of the global markets. Well, it is true that gold in term of yen made a new 20 plus year high just recently whereas in terms of USD and Euro it did not. This fact might be important to remember.

As for the USD/JPY pair?

Let's put aside the carry trade and interest rates and look at the charts.

From the 30 years chart we can learn that the Yen bottomed / USD topped at 1982 some 25 years ago! Back then 1 USD was worth about 277 Yen. Between 1982 and 1995 the USD declined to about 79 Yen for a loss of about 71%. Note that the 13 years decline was done in a three wave pattern. According to my count the USD/JPY is currently in wave (iii) and headed higher then 135 – wave (i). If you need a basic wave guide I highly recommend that you use this free Elliott wave tutorial.

Note that the 50 month MA is as stable as ever and volatility is relatively low for the last decade as the pair still trades between the 1995 low and the 1998 high. The USDJPY pair might be breaking up from a long term symmetrical triangle.


30 Years USDJPY Chart.




Japanese Yen / US Dollar 1994 - 2007

Gold in Euro and Yen

Dear readers,

Don’t be surprised to see Higher USD Index along Higher Gold price.


See also : HUI Breakout

Below are daily charts of Gold in Euro and Gold in Yen, can you see the inverted head and shoulders patterns?

US Dollar Index (USDX) Elliott Wave Update

Dear readers,

The US Dollar Index (USDX) is approaching its Head and Shoulders pattern target (~81.5). The Elliot Waves count on the 3 years weekly chart indicates that once {c – C –(B)} bottom is in place a sustained 5 waves upward move ( Wave C) should start and it will probably last at least one year. Looking at the 20 years chart it is easy to see that the USD index can go a bit higher then 100 and still stay well inside the bear market long term trend. On the bearish side - note the potential gigantic 13 years head and shoulders pattern, the neckline is around 80 and the price target = ~40.


If you are unfamiliar with Elliott Waves, I strongly recommend that you read this short yet excellent EW tutorial.

Gold / Euro / Yen

Dear readers,

I'm posting Gold/Euro and Gold/Yen Fibonacci charts for your reference, notice the stochastic crossover.

click on the charts for larger view.

Gold ($, €, ¥) weekly charts

Some of the latest gold market news from around the world:

Singapore gold fund trading starts next week

SINGAPORE, Oct 5 (Reuters) - StreetTRACKS Gold Shares (GLD.N: Quote, Profile, Research), the world's largest gold exchange-traded fund, would be cross-listed in Singapore next week in a move to capitalise on Asia's growing fondness for bullion.

It will be listed on Oct. 11 on the Singapore Exchange and would be Asia's first gold-based ETF.

StreetTRACK is the World Gold Council's New York Stock Exchange-listed product, with an average daily volume of around $400 million and assets in excess of $7 billion.-source



Official Statistics Confound Rumour of Heavy Central Bank Sales: CBGA Sales in Year 2 Confirmed as Well Under Quota at 393 Tonnes


As forecast in mid-September’s Gold Survey Update 1, sales by the signatories to the Central Bank Gold Agreement (CBGA) ended up far short of their annual 500 tonne quota at just 393 tonnes. This confounds market speculation during much of September that there had been a last minute rush to sell gold before the end of the second Agreement year (on 26th September) and that this was responsible for the period’s price weakness. -source



Riksbank reallocates gold and foreign currency reserves

The Riksbank intends to sell up to 10 tonnes of the gold reserve during the period 27 September 2006 to 26 September 2007. The sale is in compliance with the Central Bank Gold Agreement (CBGA) which was signed by 15 European central banks and came into force on 27 September 2004. The agreement, which runs for five years, enables the Riksbank to sell up to 60 tonnes of gold during this period. To date the Riksbank has sold a total of 25 tonnes of gold, 15 tonnes during the first year of the agreement and 10 tonnes during the second year. The Riksbank’s gold reserve currently amounts to 160 tonnes of gold.-source



CBOT 100 oz Gold Futures Surpass 60% Market Share

CBOT Full-sized Gold Futures Contract Surpass 60 percent Market Share for the First Time in a Single Trading Day
CBOT Full-sized Silver Futures achieves 10,000 contracts in open interest

CHICAGO October 4, 2006 The Chicago Board of Trade (CBOT) announced today that its Full-sized (100 oz.) Gold futures contract surpassed a market share milestone of

60 percent on October 2, capturing 64 percent of all listed Gold futures traded in North America that day. Open interest in the CBOT Full-sized (5,000 oz.) Silver futures grew beyond 10,000 contracts and set a new record of 10,064 contracts yesterday. The previous record was 9,959 contracts set on September 29, 2006.

Average daily volume in the CBOT Gold complex, consisting of Full-sized (100 oz.) Gold futures and options and mini-sized (33 oz.) Gold futures contracts, reached

52,464 contracts during September and achieved a market share of 54 percent of all Gold futures traded in North America for the month. -source



iShares Silver

BARCLAYS Global Investors has applied to register 15.2 million new shares in its iShares Silver Trust on AMEX doubling the total amount that could be invested, Reuters reported.

"We are registering additional shares. That does not mean the trust is automatically going to buy additional metal," Barclays spokeswoman Christine Hudacko told Reuters.-source



Year to date weekly charts of gold in terms of USD, Euro & Yen.

Silver Weekly Chart

Silver is clearly on the lead, already trading above the July top, gold will soon follow.

China should actively manage 20-30 pct of forex reserves - govt economist

BEIJING (XFN-ASIA) - China should set aside 20-30 pct of its foreign exchange reserves to be actively managed, a government economist said.

Xia Bin, head of the financial research institute within the Development Research Center, a think tank under the State Council, also said that China should increase its holdings of gold 'at the appropriate time.'

He said that the overly rapid accumulation of foreign exchange reserves could imperil management of the economy, and that steps should be taken to put excess reserves to work...- source



Below is a weekly spot silver chart with what I think are very important Fibonacci numbers. If you trade gold and silver then pay attention to this numbers.

Intraday Gold Chart Update

Gold surprised me on the upside today, climbing more then expected. But currently the price of gold is back inside the range I indicated (633$ - 618$). Don’t read me wrong, I fully expect gold to move much higher then 633$ and quite soon.


Russia's gold and currency reserves up $7.2 bln in week
MOSCOW, July 27 (RIA Novosti) - Russia's gold and foreign currency reserves grew by $7.2 billion to $262.9 billion as of July 21 from $255.7 billion a week earlier, the Bank of Russia said Thursday. -source

Below is an intraday spot gold channel chart, hopefully this one holds for more then 2 hours. If this channel holds, gold will trade between 620$ to 647$ during the next 24 hours. Click on the chart for enlarged view.

Gold/$, Gold/€ & Gold/¥ - Charts and Commentary

Dear readers,

The news which directly or indirectly related to gold are usually subjective and often causing exactly the opposite from what is assumed to be logical (sell the news syndrome). Technicals on the other hand are objective, at least when viewed from numeric perspective.

I have prepared three intraday gold charts covering the short term history of Gold/$, Gold/€ & Gold/¥ exchange rates. I added two sets of Fibonacci retracement lines, top to bottom and bottom to top. All three charts are annotated with the same Elliott wave count, high correlation is easily recognized. The pattern similarity between all three charts is indicating that gold is becoming more independent, market factors which used to affect the price of gold (USD index, Euro, Crude Oil. Etc.) are loosing significance. The gold market is evolving to be more mature, the price of gold will be affected by gold market internal forces more then anything else – this is the trend in my opinion. As time goes by and as this great global gold bull market develops, I expect gold influence to grow while gold as a monetary object will be less affected and possibly much less affected by other market variables. Gold and Forex traders should closely observe this development; things that worked in the past might not work in the Future

Gold is completing or already completed its wave (2) – III correction which should be immediately followed by volatile upward movement – wave (3) – III.

I'm repeating the suggested short term bottom target for Gold/$: 613$, 608$ & 593$.
And adding suggested target for Gold/€: 484€ & 471€ and targets for Gold/¥: 71,514¥, 69,361¥ & 68,630¥.

Click on the charts below for better view.







Related:

Gold and Silver Stocks

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