The price levels to watch on gold

Print This Post A A A

In accordance with my article last week, again, not much has changed and patience remains the order of the day.

You should recall that on October 8 we exited gold at $1,773 for a 9% profit over about four months and it was thought that one could look to re-enter at the identified support levels. The first re-enter level was $1,708, for a 30% buy back. Overnight, the gold price fell as low as $1,714, not quite low enough to make the order.

I’ve now reset those re-enter levels lower in this report and patience is again needed.

The short-term outlook for gold indicates that the price ought to fall further. I’ve revised the buy-back levels to the following:

  1. buy back 10% at $1,692
  2. buy back 20% at $1,664

Gold reached an interim peak of $1,795 on 5 October, and now trades at $1,720. A drop of 4.3%.

The gold price now needs to retract back to break out levels, or near there, to confirm or deny the longevity of the breakout. This is the key question being asked of the gold price moves.

Everything still going to plan. Gold at US$1,720, pull-back in swing

Very little has changed in terms of what I like and don’t like about the chart.

What I like about the chart?

1) The 200-day moving average pointing up (yellow line).

2) The chart is still on track for a long-term target of $2,085.

3) It looks like and feels like the run up we had from September 2009, and then April 2010. In each case, multiple upside targets were set, and all reached and exceeded.

4) A retracement to $1,708 is almost a done deal now. The lower initial buy level has been reset to $1,692, shown as the yellow line in the diagram above with Support indicated by an ‘S’.

5) A solid base has been confirmed as created now since my articles of 14 June 2012 and 3 September 2012. A solid bottom has been established from 16 May to 30 August.

6) Same as in my last article, gold has broken out of resistance at $1,660.

7) I wrote previously: “Other indicators starting to show we are on the cusp of a new uptrend.” Now I confirm, the uptrend has begun, it is preferable, but not absolutely necessary to see a nice retracement now to consolidate that uptrend.

8) Target 1, has been reset higher at $1,851, the first yellow line on right.

9) Target 2, of $1,901 has not been altered.

10) Target 3, of $1,974 has been newly projected.

11) The ‘Ultimate Target’ of $2,085 has also not been altered.

What I don’t like or what worries me?

1) We are about to retest if point 7 above is valid. Falls below $1,600 (7.5% lower) would invalidate the up trend.

2) Falls below $1,620 would be of concern.

Meanwhile, global indices have reached an interim peak as expected, and the awaited pull-back ought to commence in the coming days to weeks.

I’ve maintained the downside levels expected in the US S&P 500. Tops and bottoms are very hard to pick, especially from a timing perspective and I generally do not stipulate a time frame. However, in general, indices and major instruments are expected to play out within three to eight weeks from the time of my analysis if the analysis is to be correct.

Despite the anticipated pull-back, I remain positive because China has not fallen off the cliff. It has flirted at the edge but now looks again like it is working very hard to form a base. If China were unable to hold, then all bets are off and one needs to reassess the entire globe.

Please note: my views are not for the long term. My method results in views expressed that relate to an outlook that lasts weeks or at most, months. For example, my view on Shanghai’s Index has for now been met and completed since 22 March 2012, 11 days later. Currently regards Shanghai, I am in a cautionary observant position. Your utilisation of this information needs to take into account the time frame I set. The stocks recommended as ‘Steady as She Goes’ may be held for the longer term, which for me means months.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Also in the Switzer Super Report

Also from this edition