Gold Forecaster – Weekly #581: Gold broke down through two support levels to just above support at $1,220 and has now begun to climb to add to a forming pennant formation?

Dear Gold Forecaster Subscriber,

Weekly Gold Review

After hitting $1,286 last month, the gold price just could not keep up the momentum and tumbled back around 5% to close the week before last at $1,229.4. It appeared to be in the process of finding a bottom. $1,220 was a strong support level, from which it has now begun to climb [see forecasts below] finishing the last week at $1,227.90.

The positive jobs report, of the week before last, the repeal of Obamacare, and the increased likelihood of a June rate hike is sufficient to hold back demand in New York, Shanghai and London, at the moment. But President Trump with his contentious style is preventing from him getting the job, he promised, would be done. In the ‘swamp’ he promised to drain are creatures that are biting back. Even his own party is not truly on board with his policies, making it so difficult to make headway. We expect this to be a feature of his Presidency, so must lower our expectations accordingly.

At one point last week, New York tried to take the gold price lower but Shanghai was holding it at higher levels.

With London following New York there was a critical juncture for the gold price, where, if it convincingly broke down below $1,220 levels, strongly, it would have been bad news for the gold market in the short term. If it rose it would have signified that the current pattern being formed is positive for the gold price. This is now happening.

The fundamentals of strong Asian demand and a weak dollar are positive for gold despite it moving with the dollar, down recently. The direction for gold now depends on who controls the gold price?

The strong move, either way will happen soon. We can’t be more precise than ‘soon’. The fundamentals certainly point to higher prices, but have been doing so all the way through the fall of late.

What did become clear in the last week was the fall in the gold price in Shanghai saw the same fall in London and New York, until London and New York held at above $1,220. They then waited for Shanghai to stop falling and turn higher, towards the end of last week, before they also began to rise.

Hence our conclusion that last week, Shanghai controlled the gold price. Will this pricing power continue in Shanghai?

Please open the attached PDF* for our full issue of The Gold Forecaster,
Julian Phillips and Peter Spina


Download Issue #581

Gold Forecaster – Weekly #580: Gold broke through overhead resistance, fell back to below resistance and then hovered at that level, until now. Where next?

Dear Gold Forecaster Subscriber,

Weekly Gold Review

It has been a dramatic three weeks for gold!

This is due to rising fears sparked by Trump’s actions in Syria and the combative attitude towards North Korea. We are of the opinion that North Korea will not back off and will happily go to a war that will devastate their nuclear capacities if not considerably more. The question is, “Will the U.S. risk offending China and pulling them in to a second Korean War?”

But all of this was not sufficient to send gold soaring. It did manage to lift gold through resistance at $1,270 but only briefly. It then pulled back below $1,263 at one point, so many thought that we would see the gold price tumble, but it rose back to resistance to $1,268 and is now hovering there.

This is a different pattern to the one that has dominated developed world markets technically. So what has or is changing? As you know we track Shanghai’s Gold Exchange on a daily basis. We have seen clear indications that arbitrageurs are smoothing out the price differences between global gold markets. Shanghai has been leading the way on the gold price and is proving more and more dominant over the gold price. When New York or London tried to take gold prices further than the changes in exchange rates warranted. Shanghai remained relatively stable and London and New York were restrained. We also note that the adventurous ‘bear raids’ have not been seen for some time now despite last week providing the ideal opportunity for such raids.

We note that since the cost of speculation has been made more expensive in Shanghai, the number of attempts to shake prices by speculators such as High Frequency Traders has dropped almost completely away.  We see that as an increasingly dominant physical market dominating more and more with the influence of COMEX falling away.

In the last three weeks we have heard President Trump make the statement that the “Dollar is too strong!” The result has been that the gold price broke through overhead resistance at $1,260 to reach above the next resistance of $1,270 to reach $1,286.70. But then it retreated right back to $1,263 before hovering at $1,268.

At the moment, the gold price could technically go either way as the trading range has narrowed considerably in the last few days. The Technical position as you can see below remains positive for the gold price.

But over the last three weeks, we have seen a marked turn in attitude towards gold inside the U.S. to a positive one.

Please open the attached PDF* for our full issue of The Gold Forecaster,
Julian Phillips and Peter Spina


Download Issue #580