XAUUSD
DUST
NUGT
GDX
Fundementals:
The most fundamental driver of gold is interest rates, more specifically our treasury spread. In our recent years we have seen our yield curve flatten. Before we can fully understand what this means, we must see that there are two forces that are at work. The first we need to understand is that a steeper spread is a positive signal for economic conditions, associated with market booms and outflow capital from gold into equities. Now the inverse has happened, especially since the fed did not decide to raise interest rates again (would further flatten the yield curve if they did), this is a long term bullish signal for gold, however following the last week this gain was accompanied by a quick gap down into the 1215 range.
Treasury Yield Comparison from 1 Year Ago
Treasury Yield Comparison from 2 Years Ago
The second force at work we need to understand is that lower interest rates should make gold more attractive compared to T-bills, and higher long term interest rates associated with higher inflation expectations should make gold attractive. Thus the opposite effect also occurs, making gold less attractive in times where the yield curve is flatter.
10 - 2 Year Historical Spread
Technicals:
Looking at the March 15th low, in gold that is our resistance at the top for gold at the moment, gold needs to make gains past 1225 in Monday trading before we can see 1240s. 1200s or lower is likely to occur in the next trading week. I base this decision on there being more supports broken in the last week than before, with quick bearish gaps down through many supports. Gold will likely be trading around 1190-1200 range by the end of next week, this would put us at our high during mid October.
Given how gold had not been able to support it’s jump when the fed made their decision makes me think there are big parties selling gold on the market at prices around 1240-1250. Indecision strikes in at our low point at the end of this week around the 1215s region, and those parties willing to sell at 1240-1250 have backed out. The lack of buyers past the 1225 give me the impression that gold has become bear since its 1270 high. Fundementals indicate that the flatter yield curve, along with the economic recovery since January lows, will pull gold back to even lower levels over the following month.
I am personally in DUST @ 3.3, and still holding. Looking to sell sometime in the coming week. Before entering at a low point again. Plan to average out position if Monday trades lower below 3.3.
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Also how the heck do I add images to links that are not tradingview onto here..? Anyone know? I hate having to hyperlink charts like this. ZZzzZz....
