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


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