I’m listing down some stuff which I think could impact gold in medium term –
1/ USD (very negative)
Commercial hedgers have
covered USD very sharply in recent times. USD has taken a bit of a hit and so could be due for a bounce. This is ideally very negative for gold
http://www.finviz.com/futures_charts.ashx?p=d1&t=DX
2/ EUR (negative)
http://www.finviz.com/futures_charts.ashx?t=6E&p=d1
Even as EUR goes on towards 1 year high, commercial hedgers are going very short. If EUR takes a big hit, it leads to a spike in DXY which in turn leads to a hit to gold
3/ JPY – commercial hedgers (positive)
Commercial hedger position on JPY is pretty long and this could be encouraging for gold. Gold over last couple of years has shown sharp correlation with JPY and if JPY shoots, then so could gold.
4/ JPY – Eisuke Sakakibarra (positive)
http://www.reuters.com/article/us-usa-trump-japan-yen-idUSKBN15L0KG
Japan’s Eisuke Sakakibarra, also known as Mr. Yen for his generally brilliant predications on yen, has since more than half year been suggesting that
yen is due for a sharp rise. Commercial hedgers position on yen (as mentioned above) has remarkably been matching his predictions.
Commercial hedgers have steadily being going long rather than short and often do so much earlier than the actual movement. So, maybe we could be due for a rise sooner or later? As explained above, rising yen has been good for gold over last couple of years.
5/ Precious metals - commercial hedgers (positive)
Precious metals has seen some impressive reduction in shorts by commercial hedgers and is generally the best sign for gold.
Commercials seem to be least short on Gold in last year
http://www.finviz.com/futures_charts.ashx?t=GC&p=d1
Sharp rise from December 2016 seemed to be from comparable levels. So commercials position need not actually go to zero.
Commercials are least short on silver too in last year
http://www.finviz.com/futures_charts.ashx?t=SI&p=d1
Somewhat similar for platinum, where shorts are extremely low
http://www.finviz.com/futures_charts.ashx?t=PL&p=d1
Palladium is an exception, but since palladium has done very well last year, maybe money can flow out of palladium into other metals?
http://www.finviz.com/futures_charts.ashx?t=PA&p=d1
So overall, this section is quite positive for gold
6/ Commercial hedgers – recap (positive)
So to recap, commercial hedgers seem to be suddenly dramatically covering on gold and USD, continuing to go long on JPY and steadily go short on EUR. This is almost as if commercial hedgers believe a crisis could be coming in the Eurozone/Euro,
which would typically lead to chaos and consequently strong dollar/strong gold/strong yen.
7/ Cryptocurrencies (positive)
Bitcoin and other cryptocurrencies have been on a tear in past few months and ideally one would assume for similar reasons that gold bulls believe that gold could be due for a rise. So could cryptocurrencies be suggesting that a spike in gold is due?
8/ Buy the weakness (positive)
Gold stocks in general have been weak and past history over last couple of years has suggested that weakness has almost always shortly thereafter given a good return
9/ Elliot wave / Forged 3rd leg – Gold (Very positive)
https://hotcopper.com.au/threads/gold.2750023/page-33242?post_id=25742028
Excellent chart by
@Forged that a 3
rd leg in gold could be starting.
I’m not an expert in Elliot wave but from what I’ve read, the rise in 2000s could be wave 1, deep correction since 2011 would be wave 2 and finally rise in 2016 would be the start of wave 3 which is the most powerful wave.
Of this ongoing 3rd wave, we would just be in wave 1 and within that 2017 rise is similarly just wave 1 while wave 2 would be the correction which can go in an a-b-c pattern with "a" being correction (where Forged has marked as 2nd leg), the rise from Forged 2nd leg as “b” rise and consequently this could be the “c” correction, and once done, the 3rd leg which is the main rising wave could just be starting.
Keep in mind that if this pattern holds, then I'm just talking of wave 1 here, and this could be a serious bottoming.
10/ GDX chart (mixed)
GDX was similarly forming a 1
st wave pattern from Jan 2016 (last years big rise) with a big correction (wave 2) from July 2016, and 2017 rise could finally be the mega wave 3
http://www.finviz.com/quote.ashx?t=gdx&ty=c&ta=1&p=d
Within that GDX was again forming wave 1 (of the first wave) in Jan 2017 with an a-b-c correction till May. I’m hardly an Elliot wave expert however and not sure of the recent pattern and how exactly it ties up, and whether we can still be part of wave 2.
A negative as can be seen in the chart is that uptrend from 2017 is broken.
Positive is that around 21 has been strong horizontal support
11/ GLD (mixed)
http://www.finviz.com/quote.ashx?t=gld&ty=c&ta=1&p=d
GLD uptrend has similarly been broken although we could find horizontal support soon
12/ Gold @1180 (positive)
Both Forged chart and GLD suggest that little downside could still be there and past history has shown 1180 as a very powerful support. So, it would be interesting if we fall till there and find support.
13/ GDXJ (positive)
http://www.finviz.com/quote.ashx?t=gdxj&ty=c&ta=1&p=d
Very interestingly, GDXJ uptrend has not been broken and hence coming days are crucial to see if we form a bottom and find support.
14/ Weak falls in gold stocks and gold stocks lead the metals (positive)
Gold stocks would always lead and be ahead of the metals and the falls are getting weaker. Take Friday’s fall for example at only 2.28% for GDXJ and 1.3% for GDX, despite a 1% hit to gold
http://www.cnbc.com/quotes/[email protected]
Is this suggestive of a bottoming in gold stocks?
15/ Conclusions
Rising short covering in USD in last 2 weeks by commercial hedgers would be one of the most worrying things for gold bulls with opposite action in Euro. Sharp USD rise could be very bad for gold, if at all.
Gold stocks have taken a hit in last couple of months and are probably due for a rise sooner than later.
There are a few mixed signals above but since gold stocks lead gold, even if gold falls further,
gold stocks could very well be in a bottoming process. At the very least, even if we are not approaching a bottom, there is a good chance that one year from now, we could be higher. GDX and GLD uptrend being broken is a worry however.
As we gold bulls know, it has been very difficult to predict short term fluctuations and trend with accuracies. I’ve tried my best above to mention some stuff and my very humble opinion which could be short term positive or negative and
at first glance, it appears that we could be in a bottoming process somewhere this month.
Either that or we are headed for some serious falls but one way or the other, gold stocks seem to be approaching a place where some decisions look likely
DYOR has to be emphasized as we know goldies are a chaotic place, and I could be hopelessly wrong. I’ve tried my best to list down negatives too and we need to pay sharp attention there.
Cheers
I'm tagging
@V* and
@slange
Both are excellent short term traders who I try to read everyday (you two must have gotten tons of likes from me
)and would be happy for further inputs from them or others, and happy to have mistakes pointed out.
