by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Gold & the short and longer term view

18 Dec 2015 2:59 PM | Bill Downey (Administrator)



Gold is catching a bid today as the stock markets sell off again today.  At one point the NIKKI was down 1000 points as the BOJ disappointed and the Dow as well has had a huge selloff in the last two days.   Add the fact that the Chinese Yuan has been down for the last 10 days against the dollar.   Add the High Yield bond market collapse and you have most likely what is moving gold higher today.


Gold Short term

We have discussed that in order for gold to confirm higher prices on the short term, was to see a close above 1085.  That has yet to happen.  Also,  we said that gold must close above the blue moving average and as you can see below,  we have yet to do that as well.   We have said how important the 1072-1082 area is on a number of occasions this year and as you can see, this bounce from the end of November has not been able to make that an area of support as of this update.  Indeed, today's high was 1072.  As long as we remain below 1085 on a closing basis,  the short term trend remains down.  Resistance is 1072-1085.  Support is the 1033-1044 area and then the 1023 zone and 1006.   



Gold Cycles

The next short term cycle turn is due Dec 25th (plus or minus 72 hours).   If we can get another low into next week, it should set us up for a January-February bounce.


Long term Gold

On a long term basis, gold is fast approaching the ideal time and price points.  The 21st century uptrend line is the odds favored point for where the low will occur,  but we can't eliminate the 975-1040 area.   The time range for the low is Oct 2015-June 2016.  

But more specifically, there are two spots we are looking for a gold low and that is either Dec 2015 or March 2016.  March 2016 is the ideal spot as gold will have completed a Fibonacci 55 month bear market.  The ideal price would be in the 850 area but like we said,  we can't eliminate the 975-1040 area. Suffice to say that the bear market is approaching its end in gold.


Commodities

As you can see commodities have retraced all the gains made from the 2008 crash.  If this was gold, price would be at 680.  So even though gold has looked weak, it is actually a lot stronger than it looks.   The inverse of that of course is that gold could have one final leg down from this 1050 area that would most likely remove the last of the perma bulls in gold.  



Gold Weekly Price Chart

On our weekly chart,  the three red lines below price is the ideal range from where the low should occur.  We have reached the first line and here again, we know we are getting closer and closer to the ideal bottom.  On the other side, gold must have two monthly closes above the dual yellow trend lines just above price in order to turn the trend from Bearish to Neutral and potentially bullish.  To really be bullish,  the blue moving average is also going to have to exceed the red moving average (along with price) and obtain two monthly closes with the blue average higher.   


SIlver is also at a major crossroad in long term support.  A monthly close below 13 dollars would allow for further price drop,  but at this point in time,  the physical accumulation of silver should be higher considered at each dollar drop from here.  



Interest Rates

The real bubble is the bond markets of the world.  The 34 year move from 1947 to 1981 was for the most part growth oriented until the 60's. One can argue the move from 1975 to 1981 was one of panic and that's where gold had its move from 100 to 850.  We now have completed 34 years lower in rates and stand pretty much at HISTORIC LOWS.   Odds are high that the TREND is about to change.  This time odds favor its going to be panic that drives rates higher and if you think about it,  it looks like the FED is doing just that now.  Once the sell off begins in bonds, odds are high that a major liquidity squeeze will take place.  Its already happening now and that is WHY the US Dollar has undergone such a rally as it has.  Its the most liquid and deepest market on earth.  At some point in time, odds are high that gold is going to join the upside as well.  Gold for the most part rose thru all the higher rates into 1980.  With this low in rates now,  odds are high that gold will rise IF THE INTEREST RATE PANIC kicks in.  



Summary

Odds favor that the final low in gold is not yet in.  Its not out of the question because we have reached the upper end of the price range and time range.  However the odds are still with gold being in its last leg down.  The best thing right now would be for gold to move lower to 850 into March 2016.  That would put high odds on the bear market in gold ending. 

On a shorter term basis,  odds are high that a gold bounce should begin just before or after Christmas and lead to higher prices in January.  And then we'll see.




Technical Analysis :: Gold & Silver

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