Here is a way to look at the Gold market (XAUUSD) by way of looking at stock market volatility, which can be measured by VIXY. VIXY is a measure of options volatility and frankly is just ONE WAY to look at fear. Either way, if you look at Gold here, you will see that it is rallying without much background fear in place. What I have done is to place a projection on the current price that includes the last time gold rallied with VIXY rising from under the 19 level to the 24 level. If Gold can achieve the same gain as fear increases, then perhaps we could see the same price advance and reach near the $1350 level before settling back.
With Global QE aggressively flooding into the markets worldwide, I wonder when Gold will come to the top of investors minds again. For now, we take one day at a time and try not to predict far into the future. If the market can keep holding onto the gains it has made YTD, it could begin attracting some attention.
I think the START OF THE YEAR level of 1182 is a big level in gold and you can also see that the market LIFTED OFF from that level on April 1 to signify that level. Let's keep a close eye on this and see if VIXY surges quickly with all of the recent worries about Russia, Iran Nuclear Talks, and weak US Jobs Numbers. Time will tell. Stay tuned!
Agree or disagree with this rally??
Tim 9:29AM EST April 6, 2015
Comments
nmike
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interesting view.....likely at least to yellow resistance area
timwest
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And a quick add on VIXY: VIXY is really a measure of stock index option market "liquidity", which often inversely correlates to prices of stocks. In other words, the prices of options can soar as option premium sellers back away from providing liquidity, so as the incremental buyer comes into the market to buy, the price rises dramatically. If sellers of premium rush into the market, the prices of options (and therefore VIXY) will fall. VIXY is very interesting to analyze to figure out what the "marginal buyer or marginal sellers is doing in the marketplace" and how it is impacting prices.
Ok, now it isn't a "quick add" -- Let's continue the logic: If marginal buyers move into buying stocks and premium sellers rush in to capture premium, you will see stock prices rise and VIXY decline, but that could be bullish because you don't know who has more money in the long run, the buyers or the premium sellers. The battle goes on and you can keep analyzing price action relative to shifts in the VIXY if you keep thinking along these lines. Over time, trades can really set up as you get a glimpse into the market participants and how they are positioned.
GcNaif
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interesting analysis. once again thanks Tim
A-shot
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Are you confident in the markets in the meantime? Or still short?
GcNaif
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Wow one more great chart and lovely analysis. Thanks Tim . Here is my look for this gold up run tradingview.com/v/bVg4zDVL/