Gold's $30 run-up over the last two sessions is the sharpest we've seen in a while. Was it just a knee-jerk reaction to continuing weakness in U.S. stocks? Probably. But we'll keep a close eye on it nevertheless, since gold sentiment is so negative, sometimes verging on despair. Many investors who have followed bullion's bear market closely since prices peaked eight years ago just above $1900 seem to get their hopes up every time gold rallies moderately. Disappointment has invariably followed, and then something worse as prices receded back into a rut. And yet, quotes have been too stubbornly buoyant for bears to triumph. Gold has been in a holding pattern for six years, defying predictions of a plunge below $1000 to shake out weak hands once and for all. It is a consolidation to be endured -- but also closely watched, so that we do not mistake the start of a bull market for yet another tiresome and vexatious head fake. In practice, for now, that will mean focusing on the three 'external' peaks shown in the chart (inset). If this move exceeds all of them without much of a pullback on the intraday charts, that could be a sign that we are witnessing something more than just a tease. ______ UPDATE (Jun 3, 6:42 p.m.): This is the steepest three-day rally we've seen in a long while. It would exceed 1335.70, the last of the three peaks mentioned above with just one more modest push. If it can get past a fourth 'external' peal at 1347.90 recorded in February that isn't labeled in the chart, that would raise the odds that this rally is about to get legs. Specifically, it would put into play the 1412.20 target shown in this chart. Note that our minimum target at present
Bulls failed on the last upthrust to take out a 1293.10 'external' peak recorded in mid-April, but we'll give them the begrudging benefit of the doubt anyway because bears seem even more enfeebled right now. A push above p=1292.10 in the early going on Monday would put the futures on track to hit D=1304.00. We'll watch for a 'mechanical' buy set-up to develop in the meantime, since such opportunities are few and far between in this oft-leaden trading vehicle. _______ UPDATE (May 13, 11:34 a.m. ET): The futures have popped to 1300.70 today, making them an even better bet to hit the 1304.00 target. They did so, however, without having pulled back to a mechanical bid that would have triggered at 1286.20. For the record, I regard the so-far $13 rally as pretty weak, considering that the Dow is down nearly 600 points at the moment.______ UPDATE (May 13, 9:40 p.m.): The futures topped at 1304.20 tonight, two ticks above the rally target provided above, before pulling back by $4 [and now $29!]. The next thrust would need to exceed 1314.70, equal to an 'external' peak recorded on April 10, to refresh the bullish energy of the hourly chart. _______ UPDATE (May 19, 10:39 p.m.) Selloffs are as unconvincing as rallies, so we should be surprised if this one takes out lows near 1268 recorded within the last month. If it does, use 1256.80 as a target. Here's the chart. ______ UPDATE (May 23, 2019): I love this rally -- to get short, that is! You can do so mechanically at 1292.40, stop 1304.20. The chart linked in the May 19 update is still relevant. ________ UPDATE (May 29, 10:06 a.m.): Cancel the short. I'm hating gold as usual, but somewhat less so at the moment because it could head-fake
Requiring buyers to hit 1293.20 before we give gold the time of day has paid off once more by keeping us from getting sucked in by this morning's ill-fated rally. The futures hit 1292.80 before doing what they always do -- i.e., turning tail with a vengeance. The selloff so far has amounted to $11, but because of our 1293.20 stipulation, we were not among the bulls who got trapped by unwarranted enthusiasm. The chart (inset) shows new downside levels and targets. The lowest of them lies at 1245.40, and it closely corresponds to a bigger-picture target at 1244 that aired here earlier. This Hidden Pivot support will become my minimum downside projection once gold has bounced from yet another Hidden Pivot support at 1262.70 that has kept us properly cautious for nearly a month.
Gold got whacked Thursday as it so often does — i.e., at the apex of a rally that may have encouraged a bullish thought or two in the minds of some investors. Alas, the worst selloff we’ve seen in — well, it’s actually been only two weeks — socked the June contract with an $18 loss. In the accompanying chart, some might discern a head-and-shoulders pattern in the ups and downs of 2019. If you're believer in this formation — and I am not, since they are everywhere one wants to see them — they imply that a downdraft is coming that could bring the futures down to as low as 1220. If it’s any consolation, that would not be much of a victory for bears (aka the Bad Guys), since it would amount to a decline of less than 6%. For the time being, however, I’ll suggest sticking with the 1262.70 target that has obtained for the last two weeks. It is my minimum downside objective and worth bottom-fishing. There's a chance bulls could find the gumption to turn this bag of bolts around near 1279.40, the pattern’s ‘secondary Hidden Pivot support.______ UPDATE (Apr 16, 6:03 p.m. ET): Today's savaging changed nothing in the immediate picture. The 1262.70 target remains valid, and a rally to p=1296.60 would trigger an 'old-style' mechanical short, stop 1308.00. ______UPDATE (Apr 25, 12:03 a.m.): The adorable little tease is headed up to 1284.00, assuming it can traipse past p=1279.60. I'll need to see a print at 1340, though, before I throw in the towel on the bearish 1262.70 target. _______ UPDATE (Apr 25, 10:13 p.m.): A slog up to 1287.90 looks likely. Traders can place a mechanical bid at 1280.70, stop 1278.20, if the futures fall to that number after having peaked today in
Bulls and bears appear to be equally enfeebled and lacking in conviction. How else to explain why the futures spent the entire week screwing the pooch near the 1296.80 Hidden Pivot support of the pattern shown? It has been violated sufficiently to tip the odds in favor of a fall to the 1262.70 target, or at least to p2=1279.70. But we won't presume to know how things will turn out until one side or the other makes a decisive move. For now, we'll regard the stalemate as the Battle of the Dwarves. _______ UPDATE (Apr 8, 5:16 p.m.): A rally to the green line (click here for chart) would trigger a 'mechanical' short. I am not recommending the trade, however, unless you can initiate it using a 'camouflage' set-up that would cut the initial risk of $2700 per contract down to $80 or less theoretical. My skittishness is out of deference to the fact that gold has been playing nasty little games with bulls and bears alike, screwing with their heads at every peak and trough. In this case, the set-up for the mechanical short is so pretty that it tips me bullish, with mild expectations of a thrust exceeding the 1330.80 peak made on 3/25.
In an interview I did last week with USA Watchdog's Greg Hunter, I apparently came across as a lukewarm gold bull. Although many of those who commented apparently agreed with my grim deflationary scenario for the global economy, the negative implications this could have for gold did not resonate with Greg's audience. In fact, I see significant appreciation potential for gold, although not to the celestial heights that some seers -- most visibly Jim Sinclair, who has been predicting $50,000 an ounce more or less forever -- envision. The chart (inset) shows a logical pathway to $2277, a target that in my estimation would become an odds-on bet to be reached if Comex futures can close for two consecutive months decisively above the $1661 'midpoint Hidden Pivot'. They have already tripped a theoretical buy signal to this number at $1354 (the green line), making it no worse than a 50-50 bet to be reached. Bullion Is Not Cash Although this outlook might not thrill gold's most ardent fans, it equates to a 28% appreciation from these levels. And if the $2277 target were to be reached, that would amount to a gain of 71%. In the meantime I see limited risk in holding gold as insurance, as I always have. Come hell or high water, even if there's a global deflationary bust, I see bullion at least retaining its purchasing power against virtually all other classes of investable assets. I continue to advise keeping a shoe box filled with (admittedly worthless) U.S. ones, five, tens, twenties, fifties and hundreds just in case, since any attempt to exchange bullion for necessities in the wake of a full-blown financial panic are apt to be met with quizzical stares. Of course, in the weeks, months and possibly years following the bank-system shutdown that
April Gold's tortuous slog toward an 'easy' rally target at 1332.00 warrants a closer look at the bearish case. For if the futures were to fall just $9 to the green line at 1307.40 shown in the chart (click on inset), that would trip a theoretical sell signal to as low as 1255.90 -- a 4.5% plunge from current levels. Although the bull trend begun last August from 1182 still dominates the daily chart, the A-B countertrend in the chart is sufficiently compelling to imply that a sharp correction may be imminent. The danger would be averted by a rally exceeding 1356. 80, where a small but technically significant peak was notched on the way down from 1400 last spring. (Note: The corresponding numbers for the June contract are: 1313.80 for the short trigger, and a 1262.70 target. The midpoint support lies at 1296.80 for the June, and 1290.20 for the April.) _______ UPDATE (Mar 27, 9:57 p.m.): The short triggered by a hair, opening a path down to -- for starters -- p=1296.80, basis the June contract (30-min, A=1355.60 on 2/20). _______ UPDATE (Mar 28, 9:08 p.m.): The Junes fell hard to 1296.00 in the opening hour, slightly exceeding our target. Bulls struggled to hold this Hidden Pivot support for the rest of the day, but the dip to 1293.3o is probably sufficient to put 1279.70, the 'secondary pivot', in play as a minimum downside objective. If it fails, look for more slippage to a worst-case 1262.70 as originally forecast.
It has taken the futures fully two weeks to achieve an easy target at 1315.00, but because the move has gone on to exceed this Hidden Pivot resistance Wednesday night, the 1332.00 secondary pivot of the pattern shown can serve as our minimum upside objective for now. If it too is exceeded, 1349.10 would be in play as an odds-on bet to be reached. We ought not count too heavily on buyers to get there quickly, since this is gold, after all. But the sooner it happens, if indeed it does, the more bullish the implications.
Hard selling on Friday generated a bearish impulse leg on the daily chart that could grow still more powerful if the weakness exceeds 1281.50 in the days ahead. The effect would be even stronger if this were to occur with an upward correction lasting at least two days. This seems likely, given the pounding gold took last week. It included a 'counterintuitive' buy signal on Friday that produced only a disappointing, fleeting rebound where we might have expected a longer-lasting trampoline bounce. As dispiriting as this must have been for bulls, the futures will have a chance to bottom Sunday night at 1290.50, a minor Hidden Pivot support that I flagged in the chat room Friday afternoon when the futures were trading $10 higher. ______ UPDATE (Mar 5, 5:25 p.m.): The futures would need to hit 1299.10 within the next day or two to trigger a 'counterintuitive' buy signal. That is their last best hope for now, since a further drop would suggest gold could grope its way down into the range 1220-1250 before it is fully corrected. Here's the chart. ______ UPDATE (Mar 10): Friday's robust rally did in fact trigger the buy signal noted above. This means we should use p=1315.00 as a minimum upside target for now. The signal would look better if gold opens Sunday night with a lurch higher. _______ UPDATE (Mar 14, 8:07 p.m.): What a stretch. Gold has gotten sledge-hammered for the umpteenth time after coming within a few inches of an 'easy' rally target. The hourly chart is still bullish and the 1315.00 target still valid, at least in theory. Wake me when it gets there. Zzzzzzzz.
The rally sputtered out between two Hidden Pivots noted here earlier (1345 and 1354) but we'll give bulls the benefit of the doubt because upthrusts have consistently been exceeding external peaks going back to last summer. For now, stick with the ambitious 1378.70 target broached here earlier. If the pullback hits X=1305.80 it would trip a 'mechanical' bid that may be worth considering. Here's a chart that shows the pattern yielding the 1378.70 target. _______ UPDATE (Feb 28, 9:35 p.m. EST): The correction begun a week ago from 1350 looks bound for at least 1309.30. I expect a bounce from within 3-4 ticks of that number, but the futures may ultimately have to test a low at 1304.70 recorded on Feb 14 to get traction. _______ UPDATE (Mar 1, 8:02 a.m.): It is NOT a healthy sign that April Gold has failed to hold the crystal-clear support at 1309.50 (slightly corrected from earlier). Let's see if the 1304.70 low holds. If not, and the 'C' low sits right, I may suggest a 'counterintuitive' buy. Stay tuned to the chat room for timely details.
