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Potential 'Long' Gold Trade

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If the Gold price continues to go down then it is a very good example of how past patterns (I appreciate that both patterns manifested in the same year of 2019) do not necessarily mean future patterns will play out the same way. Now this is a very basic example and simplistic but there would need to be a sharp reversal otherwise to me it seems Gold may break on the downside. 

1117346811_SpotGold_20191107_19_10.thumb.png.d826629b0abdf702a76ca53f2b67d079.png

 

One of the reasons I think this is because I follow the Bond market closely and Bonds were heading south for a while and I felt it was only a matter of time before Gold followed suit. 

 

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I think Gold has to hold $1400 as if it goes below that psychological price level then I fear it could lead to profit taking, sell off and amongst this Gold being shorted whilst major indices are going up and making new 52 week highs. 

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In my opinion the most bearish scenario I can see is that Gold's price goes into the price area between $1380 - $1400. This is interesting as the UK debt has been downgraded, India's economy is growing at a slower pace than previously. US is involved in Syria and Oil yet the Gold price is declining. Is this the behaviour of a 'save haven' asset?

I think Gold's big price moves are fuelled by speculative capital just like other Commodities and assets. I think it is safe to say that Gold's price is unlikely to go below $1000 as that would require booming major world economies and a significant drop in Bond prices.

The question I am asking is whether Gold is likely to go above $1500 and is it likely to go above $2000? I can see Gold going above $1500 but I cannot see Gold going above $2000. This is just my personal opinion of course. It would take some serious set of bad news and negativity to drive the Gold price above $2000 so of course it is possible but at present unlikely in my view. 

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Apparently investment into Gold ETF's have surged but consumers have bought the least Gold this decade. This is an important point. The new and younger generation are not going so put their wealth into physical Gold or physical paintings like the older generations before us. Times are changing and digital assets are going to be the future. Right now the price action is down to institutional demand. That is what is driving up Gold prices currently and not the likes of 'Joe Bloggs' on the street. 

Even if the Gold price goes up I see longer term demand for Gold declining. Below is a quote from The Gold Bug. 

Demand for fabricated gold products, in contrast – from bonding-wire in electronics to dental fillings, bracelets, watch-cases and gold coins – fell to the lowest in at least 9 years.

Even Indian demand for Gold fell this Diwali. The long term narrative is there for those to see should they wish to. I can see Gold going up over the next couple of years but the longer term narrative is bearish for me in Gold. If investments in Gold begin to unwind then it could see bearish price action. 

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Gold may well continue its downward and bearish path but should any economic or political bad news come out in relation to any of the major countries around the world then Gold could begin a move upwards. 

1178339544_SpotGold_20191113_20_51.thumb.png.9fdaeafa0fe82a17fcabe11069dac86e.png

A move below $1400 would be very negative for Gold and change the sentiment for any major Gold move upwards. 

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With indices showing downward price action and Bonds showing upward price action, Gold and Silver, have the backdrop to move up today. Also Crypto's falling so it seems like today will be 'RISK OFF' rather than 'Risk On'. 

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It just shows how daily or short term price action even on the 'daily' can change very quickly. One may now think Gold is heading further lower based on the chart below.

1961609233_SpotGold_20191115_07_02.thumb.png.8e66f844536cb59b54619ea2778ade6d.png

This is why short term trading is very difficult and I tend to stick to longer trends. I find it easier as you can have days when the price action is against you but overall in that week, month or months the price action is moving in the direction of the trade placed and hence the chances of success increase.

Gold is very choppy at the moment and volatility would make it difficult to establish short term which direction it is taking but at the moment my view is that the downward correction is still in motion looking at above.

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It seems Gold is trying to consolidate around this price area. If so then when it has made up its mind it is either going to go commence its next leg up or continue downwards. 

1435857109_SpotGold_20191129_05_31.thumb.png.b1bb1809d946840566ecd00ec29b4d6e.png

$1400 is still a key price area for me so it will be interesting to see if Gold can stay above it.

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Gold is starting to look interesting. 

1752961005_SpotGold_20191129_18_28.thumb.png.04a02f3d5b5f9c7b43bbf68258830750.png

The key is to try and identify the breakout and trade direction as early as possible and then just monitor the price action to see if a trend is likely to emerge and manifest itself.

Early identification and intervention is desirable for any trader whether it be on the upside or downside for Gold as a trader can go either 'long' or 'short'. 

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Gold has commenced an upward breakout though the breakout itself is not confirmed yet (I hope that makes sense)!

210218239_SpotGold_20191203_19_37.thumb.png.25745df9648c4eca486d671f258870ae.png

Bonds have shot up today and with the US-China narrative it seems Risk Off is beating Risk On. Gold, Silver, Precious Metals and Bonds should thrive whilst this news lingers. 

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I would like to see a new high for Gold on any potential next move upwards. I would like to see $1550 and above for Gold. If Gold is to turn bullish in the current economic and political climate then a move above $1600 does seem on the cards but any potential move will be at the mercy of continuous news flow being released in relation to the US-China trade deal situation. I have no doubt there will be positive and negative news coming out in relation to the US-China trade deal and this will cause the volatility in Gold. 

'Milking the Cow' is a phrase that comes to my personal mind when it comes to US-China trade talks.  

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On 04/12/2019 at 06:50, TrendFollower said:

I would like to see a new high for Gold on any potential next move upwards. I would like to see $1550 and above for Gold. If Gold is to turn bullish in the current economic and political climate then a move above $1600 does seem on the cards but any potential move will be at the mercy of continuous news flow being released in relation to the US-China trade deal situation. I have no doubt there will be positive and negative news coming out in relation to the US-China trade deal and this will cause the volatility in Gold. 

'Milking the Cow' is a phrase that comes to my personal mind when it comes to US-China trade talks.  

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Mahmoud has his break out lines in place. Might be worth checking out his analysis for Gold. Let me know if you like it.

 

 

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@CharlotteIG,

I carried out some quick research on Mahmood below. Is he currently trading using his own analysis?

Mahmoud Alkudsi

Market Analyst

Mahmoud_Alkudsi.png
 

Expertise: Technical Analysis.

Mahmoud Alkudsi is a market analyst with DailyFX. Mahmoud holds a Master of Business Administration from Cardiff Metropolitan University of Wales, UK. Since 2011, Mahmoud has been active in currency and commodities markets. He is a mix of fundamental and technical trader following economic trends defining the larger themes, then using support and resistance on charts to time entries.

 

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I like the current 'consolidation' going on in Gold right now. It is boding well for another large move but in which direction is the question. It could easily go either up or down from here. I think the political and economic risks will dictate the direction of Gold but it is building a nice foundation at this current price level. 

I accept this could change very quickly but right now it is all about monitoring the price action. 

603384024_SpotGold_20191209_20_14.png.39dfdb7db182e58129a61c04fd70a8c4.png

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On 05/12/2019 at 19:19, TrendFollower said:

@CharlotteIG,

I carried out some quick research on Mahmood below. Is he currently trading using his own analysis?

Mahmoud Alkudsi

Market Analyst

Mahmoud_Alkudsi.png
 

Expertise: Technical Analysis.

Mahmoud Alkudsi is a market analyst with DailyFX. Mahmoud holds a Master of Business Administration from Cardiff Metropolitan University of Wales, UK. Since 2011, Mahmoud has been active in currency and commodities markets. He is a mix of fundamental and technical trader following economic trends defining the larger themes, then using support and resistance on charts to time entries.

 

We're not an advisory service, the analysts analyse the markets they think look interesting for clients. The markets they pick will be ones that lots of clients trade. The analysts would not be able to confirm how they trade with their own money. 

 

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@CharlotteIG It's pretty much a consensus view that gold is going to go higher at some point, although clearly not in the short-term.  So I question the usefulness of this analysis when there are so many other things they could be looking at.  Not a word on Arabica coffee?  I haven't seen any IG analyst articles on it, but then the deposit for a single point/contract is a fortune so maybe hardly any clients are doing it.  Edit: checked and yep, it's in the 50 - 250 range.

Edited by dmedin

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@CharlotteIG,

I am fully aware that IG are not an advisory service. The IG Analysts offer very little to me based on my own trading principles and strategy but they may well be of value to other traders, I don't know?

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Gold and Silver are both looking like they want to break out to the upside. It could be a case of repositioning capital for those who think turbulent times are ahead in 2020 in terms of stock markets declining and they will be positioning themselves into precious metals like Gold and Silver to capitalise on this should this materialise.

Silver on the 'daily' has surpassed its 50 DMA and was already above its 20 and 200 DMA's. It seems like it may go for the 100 DMA.

Gold is similar to (above) but it seems Silver's move is more sharper and aggressive than Gold's at present. 

 

 

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On 17/12/2019 at 07:33, TrendFollower said:

@CharlotteIG,

I am fully aware that IG are not an advisory service. The IG Analysts offer very little to me based on my own trading principles and strategy but they may well be of value to other traders, I don't know?

I do understand. They're hired due to their knowledge on TA but you're right there are others on here that use TA in a different way that you may find more useful. It's up to all trader to find their own strategy for their trading :) 

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On 16/12/2019 at 16:00, dmedin said:

@CharlotteIG It's pretty much a consensus view that gold is going to go higher at some point, although clearly not in the short-term.  So I question the usefulness of this analysis when there are so many other things they could be looking at.  Not a word on Arabica coffee?  I haven't seen any IG analyst articles on it, but then the deposit for a single point/contract is a fortune so maybe hardly any clients are doing it.  Edit: checked and yep, it's in the 50 - 250 range.

I can speak with them about diversifying the markets they analyse. If Arabica Coffee is something you would like them to look at I can speak with them. 

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45 minutes ago, CharlotteIG said:

I can speak with them about diversifying the markets they analyse. If Arabica Coffee is something you would like them to look at I can speak with them. 

 

The ability to buy call options on stocks would be the single best thing ever.  But I suppose the business logic is that IG would rather have clients getting stopped out and then re-entering their trades, as that will generate more money from spreads etc.  For my part I think I'm pretty much finished with SB on stocks, it's just a really dumb thing to do 99% of the time.

Edited by dmedin

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Any 'dips' in a rising Gold price move could be seen as an opportunity to add to existing positions or to potentially take a new position.

I would like to see a move towards $1550 materialise should this current price action manifest itself into a bullish upward move. 

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On 23/12/2019 at 11:01, CharlotteIG said:

I can speak with them about diversifying the markets they analyse. If Arabica Coffee is something you would like them to look at I can speak with them. 

 

Turns out I'm grateful for the focus on gold (and silver), as we've seen a nice bit of pre-Christmas action :D

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So it turns out silver did bounce off the pivot and move higher, looking like it is due a pullback based on the RSI but keep riding - next stop R2 :D

XAGUSD-4-hours.thumb.png.095c5283042028be6e8d7f0cacf37a7f.png

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Both Gold and Silver are looking super bullish. Yes there may well be a pullback at some point but it seems like a new upward move is materialising. 

Silver hit $18.00+ and Gold has surpassed $1500 which are both very important psychological price points. Longer term Silver could try for $20.00 and Gold has that elusive $2000 price area which I don't think it can hit without major economic turmoil, severe market corrections and a worldwide downturn. This is just my personal opinion at this point in time.

In any upward strong move Silver is like 'Gold' on steroids. So potentially there are more points on offer with Silver than on Gold but Gold would be the lesser risk in terms of volatility. 

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There is something I am missing with this current Gold and Silver move upwards.

Generally Bond prices are a great source of information and a brilliant indicator. However, on this occasion Bond prices are generally declining and whilst Indices are declining too (I think this is just a short and temporary correction until the upward resumption of US indices until the US elections) the narrative behind Gold and Silver's move is not clear. 

There is a high level risk that Gold and Silver both turn bearish once the correction on US indices is complete. Bonds are declining pretty sharply and whilst Bonds and Gold can move in the opposite direction I have found that the strongest trends in Gold are when Bonds and Gold move together. 

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This article in MoneyWeek just made me chuckle. I mean $7000+ price target for Gold but when? The author is suggesting sometime in the 2020's so basically the next 10 years. This is a very poor article and very misleading for novice and beginner investors and traders. I would be surprised if Gold is anywhere near $7000 in the next 10 years. I am struggling to see $5000. I mean $2000 to $3000 would be a gigantic move for Gold but even this would require financial armageddon. 

Here’s how gold could rise above $7,000 an ounce

https://moneyweek.com/520221/heres-how-gold-could-rise-above-7000-an-ounce/

I am not impressed by this article one bit. Yes I do think Gold could move towards $2000 should equities around the world take a tumble and there are political, economical and financial troubles around the world. However, giving figures of $7,000 is like the Bitcoin forecasts of $20,000, $50,000 and $100,000. I genuinely think Bitcoin has more of a chance to hit $20,000 than Gold does of hitting $7,000. 

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I am expecting the Gold price to move towards and into this 'blue rectangle' which I have shown in the chart below:

819835206_SpotGold_20191231_10_44.png.325b31e05747b80696c045dbca48f9b7.png

If Gold reaches the 'blue rectangle' price zone then either it will retreat and reverse or if this truly is a bullish upward trend manifestation then it will simply blast through and continue upwards. So for me a key period is coming for Gold which will be crucial in terms of trend direction. 

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