At present, interest rates are driving gold. How long this will continue is hard to say. It depends on what shocks lie in store for the global financial system. Two pending rolls of the dice are the November 8 elections and negotiations over Britain’s exit from the EU.
Long-term Treasury yields are rising while gold is falling. Expectations of a rate rise after the November election are growing and a test of resistance at 2.0 percent is likely. But a lot depends on continued stability of financial markets.
Spot gold reacted to rising interest rates by breaking support at $1300/ounce, warning of a test of primary support at $1200. A brief pause at medium-term support at $1250 is indicated by a spinning top candlestick, signaling indecision. Support at $1250 is unlikely to hold but the primary up-trend is intact unless support at $1200 is broken.
The ASX All Ordinaries Gold Index broke support at 4500, warning of a primary down-trend. The immediate target is 4000.
Gold appears, to me, to be in a long-term bear trend that set in since the end of 2011, along with most other metals and minerals.Of course, short-term rallies will arise.
However, the essence with gold, silver, oil, iron-ore, natural gas,coal, aluminium and particular other metals/minerals is one of fundamental over-supply. The latter eventuated from excessively high pricing and the China-driven explosive demand during the ten years ended in 2011.
Historically-informed opinions on the associated future points to the decided bias that related prices fall for more than 15 years before a true and sustainable bottom emerges. Refer also: http://www.businessinsider.com.au/gold-is-buried-knee-deep-inside-a-commodity-bear-super-cycle-2016-10
My feeling is that, with regard to ‘combining economic and technical analysis’, one ought to ‘see’ present charting technicals more through the prism of former medium-term economic patterns (which, by my definition, then amounts to a philosophy of ‘ non-predictive’, but rather based on previous outcomes [ refer ‘historically-informed’].
Thus, price rallies (like the Gold rally since late 2015) then ‘ought’ to be ‘risk-defined’ as “probable shorter-term spike, within a medium-term downtrend, the latter taking longer-term historically-evidenced patterns into account”
“Historically-informed opinions on the associated future points to the decided bias that related prices fall……for more than 15 years before a true and sustainable bottom emerges.”
“My feeling is that, with regard to ‘combining economic and technical analysis’, one ought to ‘see’ present charting technicals more through the prism of former medium-term economic patterns (which, by my definition, then amounts to a philosophy of ‘ non-predictive’, but rather based on previous outcomes [ refer ‘historically-informed’].”
Moses, Please keep your comments pithy and to-the-point, so we know where you stand. For example: