gold, page-75106

Gold stock sentiment indicator.

Fridays’ action was interesting.

First up, the AUD continued to drift lower. This will give foreign investors significant cause for concern.

Political verbal diarrhoea regarding sabre rattling and ramping up trade tariffs and other forms of punishment will push gold prices around.

Question is – is the POG rebound sustained? Gold response to verbal stoushes is often short lived.

What it has done is push down commodity prices which are a negative for the AUD. This is compounded with weak economic data.

Hence the $65 rebound in A$POG.

How will foreign investors respond? Not sure but the reality is gold has only risen about US$12 from the previous close.

The HUI and XAU are up 3% but our market does not always follow foreign gold indicators

I suspect there will be the usual drop in POG at the Aussie open and a bit of a sell-off in stocks before recovering later in the day as the AUD sinks further.

The main reason I was looking for a A$1,530 gold price was to increase the head room for the next leg up. Not concerned if this is not hit.

I don’t think the AUD fall will be sustained UNLESS trade therefore commodity prices are a major issue.

The AUD may respond more to our easing of COVID-19 restrictions, low infection rates and re-opening of the economy, though gradual.

Cannot say the same for the US. I suspect they have a world of grief ahead of them. Far too early for them to ease restrictions.

Though they have increased testing rates, there is a positive for EVERY 6 TESTS.

I think the markets know this as well, combining poor economic data (worse than ours) with dismal corporate reporting and we may be on the next big move down.

I will be generating charts on the Dow, S&P500 and NASDAQ to check resistance levels.

Certainly on the NDQ and SPY, resistance has been hit on the shortest term charts with the last two days suggesting serious weakness. Normally the shortest term charts can be ignored.

Dynamics for the gold sector appear to have changed.

Leading indicators have plunged 10-15% to the mid 30’s.

It has the feel of a capitulation sell-off but without the depth of a month ago.

I expect the indicator to fall further on Monday if leading indicators stay low.

Something to consider – analysts have swung from calling target prices to determining support (around $1,650) for POG. A contrarian indicator?

If POG was to fall to US$1,650 with the indicator at the current level, most stocks would break through their uptrends. I don’t think so.

Another smallish sell-off in POG is possible and there is room on the charts to accommodate this but nothing substantial is anticipated.

Even if gold hovers around $1,700 for most of next week, stock prices will likely dip lower.

The indicator should be a good guide to show when the bottom is in. Somewhere around 45% before the reversal?

And finally, a flip through the majors and I see that many are within 2-3% of the pull-back prices I was expecting. This could happen on Monday.

Stock management and chart maintenance this weekend. May have more for you on Monday morning.