Gold - The other way to look at it

FX:XAUUSD   Gold Spot / U.S. Dollar
1341 8 20

- One way to look at it would be to say that the 2011 TOP was the end of the rally since 2001 and a large correction to 900/700 may be required/expected.
- The other way to look at it:
* the correction from 2011 is just correcting the move from 2008 to 2011 and there is a 3rd rally missing.
* the fact that it corrected 61.8% of the previous move could be interesting.

My point is: both scnearios are possible really but in terms of risk reward without evaluating the probability to stop at say 1111 or whatever figure you bick, if it works, it could be for a large reward/risk.

In essence: if Gold             is not in a larger correction to 900 or in multi-decade slide, 2400 could be the next target.

Fundamentally - What has been affecting gold:
- A strong psychological attachment to its value as safe haven (note only 1% of the production is used in the industry).
- Inflation .
- Rates: The lower the better unless super high inflation . Real Rates a better measure. ( Gold             does not provide any yield)
- USD strength because this is the currency in which it is measured but not produced.
- Currency risks (going back to inflation )

If you look at an inflation adjusted chart of gold             itself, you will find out out that it is 50% lower compared to its previous top in 1980, 35 years ago. From that angle, a move up is not out of place.

Currently the fear is deflation but longer term, all these QE create Long Term Inflation fears.

Rates can't be lower and that is supportive locally.

The Greece/Italy Saga may not be over.. it would take a few months to intensify if it does.
NFP just came lower than expected.
This was something cooking as NFP had been far too stable compared to history.
EURUSD jumped on the news. It is possibly not over.
Gold should benefit as the rates hikes becomes less likely if data soften.
MINI TAKE OFF AT PLAY. NEEDS FOLLOW THROUGH ABOVE KEY 1235 and 1275... it will take the whole summer to play out.
+2 Reply
Oh no Yaka, we are in different poles :-)
+1 Reply
YaKa jangseohee
well - Mine works better right now - not over: my strategic stop is now 1140 on weekly close.
+1 Reply
original, unorthodox, great, like it
What about this? ... Idea borrowed from you
YaKa HiTech
Hehe - Yes maybe - we would have time to revisit... my issue is more in the 1150/1250 area right now:)
Watching the SNB and Asia currently, fundamentally speaking.
Nice breakdown Yacine.
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