Gold tends to struggle after pricing the ATH / Wide explanation
Allow me to explain my personal approach / formula, why I am heavily on Selling side regarding Gold's Short and Medium-term trend:
Gold's cyclical behaviour: It is well known that Gold’s Price-action is evolving cyclically with a dominant period of #30 Years and is mainly affected by commodity / financial markets and macro-economic indicators. For centuries, Gold has had the interesting characteristic of being a commodity, i.e., it is well known as money and a product at the same time. Because it has always been a universally-accepted product that is itself a store of value, the vast majority of countries around the world took the metal as a common denominator of all economic transactions. In addition, Gold has continually met all the requirements that a good commodity should: it is durable (it is stainless, it is an ''inert'' metal), it has a (usually) High market value, it is portable and it is homogeneous (i.e. it has always been a good with advantages over any other media of exchange). Currently, it takes the form of a store of value held in the inventories of Central banks around the world as a reserve that keeps its purchasing power. Gold is acting as a stabilizing force in the financial system, reducing losses in the face of negative Swings on the market.
Gold reserves: Gold’s Price-action is basically affected by #2 factors: the proved reserves of Gold commodity / financial markets and macro-economic events. Particular events that have effect over Gold’s Prices have to do with one of the #2 mentioned groups; for instance, the global financial market is under uncertainty in the sense of the trust of Investors on it, the #2008 financial (U.S. Housing) crisis is an example of distrust on being a company shareholder, and it can be verified how the Price-action of Gold rose rapidly during the following Years until a slight recovery / relief in the financial market took place. Gold reserves add to the supply of the metal to the market, and the Price-action is going to be directly affected by how much Gold central banks store and emit to the global market, along with the supply - demand balance. The mining reserves add their influence too, because the Gold market can be speculative at the times, and while mines produce more or less Gold and augment the circulating supply around the world, Price of Gold is directly affected. Global macroeconomic factors also have a direct effect on Gold Prices such as: Inflation, CPI, unemployment rates, Stock index returns, Treasury Bond Prices, Interest rates, DX among others.
Gold's violent Volatility: A crucial fact has to be faced, Gold Prices can be violently Volatile at the times (currently) that is, they have a High variance to be predicted with the desired precision for Investors like mining companies, Central banks, and all the speculative agents of commodity market, which makes it sometimes a High risk one also, in other words: any prediction of it’s nominal or real Prices sometimes has a very High level of uncertainty of being even accurate. Many models for predicting gold Prices have been built including my own successful formula I have been working on for many Years. On of the Gold’s models propose linear or non-linear relationships between multiple variables and the Gold Price. The fact that macro-economic cycles affect Gold Prices is most of the times ignored by Investors (retail Traders), or partially taken into account, when this fact is of great importance in order to predict Short and Medium-term trends on Gold Prices with good accuracy, and also to understand the current circumstances about the market. The latter is supported on the fact that the Price-action of Gold relates in a direct proportional way to Gold reserves and Prices of metal products, while it relates in a converse proportional way to financial market indexes and global macro-economic indicators and oscillations / aswell on studies about potential Gold bubble Prices and financial crisis which may be ahead, by using data since #1900 to #2021 Year. As the DX and Bond Yields (along with Usd-Jpy in some cases / structure), is a financial variable that is reported Daily and affects Gold’s Price-action conversely (as direct correlating assets Traders should pay attention to).
Retail Trading: As discussed, Gold’s Prices could be very Volatile to be predicted with accuracy in the Short and Medium-term; however, they behave cyclically in relation to DX and Bond Yields. This knowledge opens a door for better understanding the behavior of Gold Prices in the Medium and Long-term. As Gold is a commodity, it tends to behave in a positive relation to energy Prices and in a negative relation with financial markets and macro-economic indicators. It is so, since Gold is seen as a safe-haven when hazardous times hit the global economy, and taken to a second place when the economy is doing well and thus it is more attractive to invest in companies than in Gold itself. Although the supply of Gold on the international markets is negligibly increased by small gains in production and some Central banking policies, these increases are not enough to meet the demand that has been going on since the financial crisis of #2008, resulting in a Gold deficit for covering a Stock market and macro-economic downfall that may occur. In other words, the supply of Gold, although increasing slightly in absolute terms, is generally decreasing in terms of availability in this kind of circumstances. The Gold rush then is predicted to be stronger after #2021 Year and a repetition of history would take place if that happens, that is, Gold Prices would decrease dramatically as the DX should engage a rally.
Technical analysis and ATH cycle formula: One of the bigger charts (#Monthly) caught my attention where ATH from #1,980 Year was Sold back later on. Second ATH, Year #2008 (Housing crisis), Gold engaged the aggressive takedown on the aftermath. Another ATH seen on August #2011, was Sold instantly and engaged multi-Week Descending Channel. Many similarities with current fractal has another August ATH (#2020 Year), where Gold engaged serious decline and is currently Trading below that level. As Gold is cyclical asset, according to my model, Gold tends to struggle after pricing new ATH, as soon High is priced, aggressive takedown occurs and Price-action forms Long-term Descending Channel, and that’s why I am heavily on Bearish side (Selling every High) as Shorting is the best way to make Profits as a retail Trader. Keep in mind that with this Trading week's macro-economic Fundamentals all positive wise for DX, the market was yet again perfectly timed for strong Bearish takedown. The only important reports left are Fed minutes and NFP. The latest eruption in the U.S.- China Trade dispute pushed a widely watched Treasury market recession indicator to the Highest alert since #2007. Rates on Bond Yields sank aggressively, completely erasing the surge that followed Trump’s #2016 election. At one point, they yielded #32 basis points less than #3-Month bills, the most extreme Yield curve inversion since the lead-up to the #2008 crisis. Gold could be in a significantly Lower-rate environment for a while. The outlook for Medium-term configuration on Gold declines resonated in options markets, too, which Price-action is Targeting typically a drop through #1% this Month. If current #1,722.80 benchmark isn't broken, I also note the potential for a further leg down in the Bond Yields curve. Potentially, the curve starts to decline because the Fed is being pressured by a combination of data and obviously downside risks on the market, which advises retail Traders to be more careful. Heavy Buying in Fed funds futures contracts since the Fed delivered its quarter-point reduction lately means the market is now pricing in another reduction in November. My formula points that the signal from the curve suggests money markets should be pricing in a Higher probability of the Fed’s policy rate unchanged all the way towards #Q1. There’s a huge disconnection now between printed money and background of it. Keep in mind that my approach is Swing Trading (Long-term positions) within quarterly cycles and my goal is identifying the correct trend for a longer period of time, even if it lags to a small extent.
Gold's Short-term commentary: It is evident on current market configuration is that there is a clear Descending Channel on bigger proportion charts and on smaller time-frames, Gold is Trading above all Pivot points also invalidating all Resistances in the same manner. Expect a corrective drop / takedown towards #1,761.80, after possible #1,812.80 Higher High’s test, consolidation around Stabilization area as equity holders / Investors digest the news and evaluate their strategy. Gold clearly accumulated all the panic capital from Bond Yields and is bound to give some back. On Weekly (#1W) basis and as a result of strong Williams%, my Target remains #1,678.80. My Daily chart’s indicators still provide the safe Selling zone as they still haven't readjusted to the aggressive overnight (today’s session) downtrend. I will approach today's session with extreme caution and keep an eye on Indicators turning Bearish. Gold is far from breaking Weekly chart’s Descending channel and what Supports Selling is Technical projection which is still not #100% Bullish, even with hammered Bond Yields. Both ways, Gold is eyeing for Medium-term aggressive takedown. It was well known that Fed is in tight spot and that rate will not be unchanged at least for #3 more Trading Months, and as statistically: #3 out of #3 Fed minutes aftermath's were Bullish wise for Gold, I see no reason why it shouldn't be the case at the moment. If #1,792.80 Resistance zone is broken on evident Short-term recovery, #1,812.80 might be next extension and Ultimate Top before new #1,761.80 Selling sequence.
Gold's cyclical behaviour: It is well known that Gold’s Price-action is evolving cyclically with a dominant period of #30 Years and is mainly affected by commodity / financial markets and macro-economic indicators. For centuries, Gold has had the interesting characteristic of being a commodity, i.e., it is well known as money and a product at the same time. Because it has always been a universally-accepted product that is itself a store of value, the vast majority of countries around the world took the metal as a common denominator of all economic transactions. In addition, Gold has continually met all the requirements that a good commodity should: it is durable (it is stainless, it is an ''inert'' metal), it has a (usually) High market value, it is portable and it is homogeneous (i.e. it has always been a good with advantages over any other media of exchange). Currently, it takes the form of a store of value held in the inventories of Central banks around the world as a reserve that keeps its purchasing power. Gold is acting as a stabilizing force in the financial system, reducing losses in the face of negative Swings on the market.
Gold reserves: Gold’s Price-action is basically affected by #2 factors: the proved reserves of Gold commodity / financial markets and macro-economic events. Particular events that have effect over Gold’s Prices have to do with one of the #2 mentioned groups; for instance, the global financial market is under uncertainty in the sense of the trust of Investors on it, the #2008 financial (U.S. Housing) crisis is an example of distrust on being a company shareholder, and it can be verified how the Price-action of Gold rose rapidly during the following Years until a slight recovery / relief in the financial market took place. Gold reserves add to the supply of the metal to the market, and the Price-action is going to be directly affected by how much Gold central banks store and emit to the global market, along with the supply - demand balance. The mining reserves add their influence too, because the Gold market can be speculative at the times, and while mines produce more or less Gold and augment the circulating supply around the world, Price of Gold is directly affected. Global macroeconomic factors also have a direct effect on Gold Prices such as: Inflation, CPI, unemployment rates, Stock index returns, Treasury Bond Prices, Interest rates, DX among others.
Gold's violent Volatility: A crucial fact has to be faced, Gold Prices can be violently Volatile at the times (currently) that is, they have a High variance to be predicted with the desired precision for Investors like mining companies, Central banks, and all the speculative agents of commodity market, which makes it sometimes a High risk one also, in other words: any prediction of it’s nominal or real Prices sometimes has a very High level of uncertainty of being even accurate. Many models for predicting gold Prices have been built including my own successful formula I have been working on for many Years. On of the Gold’s models propose linear or non-linear relationships between multiple variables and the Gold Price. The fact that macro-economic cycles affect Gold Prices is most of the times ignored by Investors (retail Traders), or partially taken into account, when this fact is of great importance in order to predict Short and Medium-term trends on Gold Prices with good accuracy, and also to understand the current circumstances about the market. The latter is supported on the fact that the Price-action of Gold relates in a direct proportional way to Gold reserves and Prices of metal products, while it relates in a converse proportional way to financial market indexes and global macro-economic indicators and oscillations / aswell on studies about potential Gold bubble Prices and financial crisis which may be ahead, by using data since #1900 to #2021 Year. As the DX and Bond Yields (along with Usd-Jpy in some cases / structure), is a financial variable that is reported Daily and affects Gold’s Price-action conversely (as direct correlating assets Traders should pay attention to).
Retail Trading: As discussed, Gold’s Prices could be very Volatile to be predicted with accuracy in the Short and Medium-term; however, they behave cyclically in relation to DX and Bond Yields. This knowledge opens a door for better understanding the behavior of Gold Prices in the Medium and Long-term. As Gold is a commodity, it tends to behave in a positive relation to energy Prices and in a negative relation with financial markets and macro-economic indicators. It is so, since Gold is seen as a safe-haven when hazardous times hit the global economy, and taken to a second place when the economy is doing well and thus it is more attractive to invest in companies than in Gold itself. Although the supply of Gold on the international markets is negligibly increased by small gains in production and some Central banking policies, these increases are not enough to meet the demand that has been going on since the financial crisis of #2008, resulting in a Gold deficit for covering a Stock market and macro-economic downfall that may occur. In other words, the supply of Gold, although increasing slightly in absolute terms, is generally decreasing in terms of availability in this kind of circumstances. The Gold rush then is predicted to be stronger after #2021 Year and a repetition of history would take place if that happens, that is, Gold Prices would decrease dramatically as the DX should engage a rally.
Technical analysis and ATH cycle formula: One of the bigger charts (#Monthly) caught my attention where ATH from #1,980 Year was Sold back later on. Second ATH, Year #2008 (Housing crisis), Gold engaged the aggressive takedown on the aftermath. Another ATH seen on August #2011, was Sold instantly and engaged multi-Week Descending Channel. Many similarities with current fractal has another August ATH (#2020 Year), where Gold engaged serious decline and is currently Trading below that level. As Gold is cyclical asset, according to my model, Gold tends to struggle after pricing new ATH, as soon High is priced, aggressive takedown occurs and Price-action forms Long-term Descending Channel, and that’s why I am heavily on Bearish side (Selling every High) as Shorting is the best way to make Profits as a retail Trader. Keep in mind that with this Trading week's macro-economic Fundamentals all positive wise for DX, the market was yet again perfectly timed for strong Bearish takedown. The only important reports left are Fed minutes and NFP. The latest eruption in the U.S.- China Trade dispute pushed a widely watched Treasury market recession indicator to the Highest alert since #2007. Rates on Bond Yields sank aggressively, completely erasing the surge that followed Trump’s #2016 election. At one point, they yielded #32 basis points less than #3-Month bills, the most extreme Yield curve inversion since the lead-up to the #2008 crisis. Gold could be in a significantly Lower-rate environment for a while. The outlook for Medium-term configuration on Gold declines resonated in options markets, too, which Price-action is Targeting typically a drop through #1% this Month. If current #1,722.80 benchmark isn't broken, I also note the potential for a further leg down in the Bond Yields curve. Potentially, the curve starts to decline because the Fed is being pressured by a combination of data and obviously downside risks on the market, which advises retail Traders to be more careful. Heavy Buying in Fed funds futures contracts since the Fed delivered its quarter-point reduction lately means the market is now pricing in another reduction in November. My formula points that the signal from the curve suggests money markets should be pricing in a Higher probability of the Fed’s policy rate unchanged all the way towards #Q1. There’s a huge disconnection now between printed money and background of it. Keep in mind that my approach is Swing Trading (Long-term positions) within quarterly cycles and my goal is identifying the correct trend for a longer period of time, even if it lags to a small extent.
Gold's Short-term commentary: It is evident on current market configuration is that there is a clear Descending Channel on bigger proportion charts and on smaller time-frames, Gold is Trading above all Pivot points also invalidating all Resistances in the same manner. Expect a corrective drop / takedown towards #1,761.80, after possible #1,812.80 Higher High’s test, consolidation around Stabilization area as equity holders / Investors digest the news and evaluate their strategy. Gold clearly accumulated all the panic capital from Bond Yields and is bound to give some back. On Weekly (#1W) basis and as a result of strong Williams%, my Target remains #1,678.80. My Daily chart’s indicators still provide the safe Selling zone as they still haven't readjusted to the aggressive overnight (today’s session) downtrend. I will approach today's session with extreme caution and keep an eye on Indicators turning Bearish. Gold is far from breaking Weekly chart’s Descending channel and what Supports Selling is Technical projection which is still not #100% Bullish, even with hammered Bond Yields. Both ways, Gold is eyeing for Medium-term aggressive takedown. It was well known that Fed is in tight spot and that rate will not be unchanged at least for #3 more Trading Months, and as statistically: #3 out of #3 Fed minutes aftermath's were Bullish wise for Gold, I see no reason why it shouldn't be the case at the moment. If #1,792.80 Resistance zone is broken on evident Short-term recovery, #1,812.80 might be next extension and Ultimate Top before new #1,761.80 Selling sequence.
- My official and only Telegram Channel: t.me/goldenBear88
- Few other un-official channels are not mine, they are copies using my real information (impersonating me and my work / identity) so keep that in mind and beware of those.
- Few other un-official channels are not mine, they are copies using my real information (impersonating me and my work / identity) so keep that in mind and beware of those.
