A lot has happened since my last article and chart analysis, including the passing of my dear father. I want to share an incredible experience that occurred while attending the funeral services and how it relates to one of my recent articles, but I am saving that story for its own article and will publish it soon. Let us go right to the technical analysis on gold, and then a link garden with a few choice articles and interviews to close up shop tonight.
One visual comes to mind while watching gold rally:
Here is the gold spot weekly chart as of the Aug. 2 close, overlaid with the CFTC’s Commitments of Traders (CoT) report data as of Jul. 30. Note that the CoT is always delayed by one week. The Aug. 6 CoT covering the previous week’s price action will be released on Friday, Aug. 9.
The purpose of the overlay is to help identify near-term price trends based on positioning by the commercials (bullion banks) and large specs (hedge funds). Almost without exception, the commercial (bullion banks) traders build short positions during a rising price trend and large specs (hedge funds) add long positions to capture the momo play. When the gold price is approaching an inflection point, their positioning begins to flip. It appears that gold is very close to an inflection point or will continue the extended chop and consolidation until the next leg up. Zoom in to the bottom of the chart and note the Jul. 30 data points marked with red dots. I included the 50 Exponential Moving Average (EMA) and recent Flag Tilt pattern for reference on the following charts.
Gold weekly chart as of Aug. 2, 2019 close…
Excerpt from the Jun. 20 weekly chart analysis:
“The Fibonacci resistance level at $1,380 is now history after 5 years. Do not be shocked or whine if a pullback occurs and tests the resilience of support at $1,380… There is not much resistance for upside potential to where the price was in 2013. Here are the price levels to keep an eye on: $1,430 lateral from Aug. 2013; $1,483 Fibonacci; $1,530 lateral from Apr. 2013;$1,586 Fibonacci;$1,733 Fibonacci;$1,920.74 Sep. 2011 high.”
Excerpt from the Jun. 28 weekly chart analysis:
“Gold had a wicked run after leaving the Cup ‘n Handle pattern at $1,350 and the $1,380 Fibonacci level in the dust. A Plunger Candle coincided with the G20 summit and is a warning that there may be further downside. I would not be surprised to see the $1,380 resistance level challenged as a support area. All of the studies are in a bullish stance, but a flurry of risk-off sell orders may take place at the 6pm EDT open and overnight on Sunday in reaction to the risk-off geopolitical points scored by the POTUS over the weekend.”
On June 30, at the Sunday evening GLOBEX open that followed the G20 love fest with a perceived China and North Korea truce with the POTUS, the previous week’s Plunger Candle confirmed as gold immediately fell to $1,383.
Gold 1-minute chart, Jun. 30, 2019 8:11pm EDT…
The price did not fall any further and confirmed the $1,380 Fibonacci and topside trendline of the Ascending Triangle as solid levels of support. The chart pattern currently dominating the price action is a bullish Flag Tilt. As noted in the Jun. 20 analyses, the $1,430 lateral resistance area from the Aug. 2013 high of $1,433.73 has been a challenge to breach. All of the Exponential Moving Averages (EMA) and Simple Moving Averages (SMA) are aligned with the stars, the DMI-ADX remains in a bullish stance, the StochRSI is in oversold territory but can remain there in the near-term, and Volume is steadily rising with an upward price consolidation. All the studies are indicative of a potential for additional price gains in the near-term.
Gold daily chart as of Aug. 2, 2019 close…
Drilling down into the daily chart provides some insight to the price action since the bullish Falling Wedge confirmed at the end of May:
- The price rally in gold began on May 30 due to a threat by the POTUS to levy tariffs against Mexico, which would have opened another trade war front.
- A bullish Pennant Tilt confirmed following a breakout from the Cup ‘n Handle pattern with rising volume.
- The $1,380 Fibonacci resistance level was obliterated within one week.
- The threat of tariffs against the E.U. set the stage for a pivot and wicked $53 rally off the $1,380 Fibonacci support level, relinquishing the G20 love fest correction to a distant memory.
- A bullish Pennant pattern morphed into the current Flag Tilt during mid-July.
- The $1,430 lateral resistance area from Aug. 2013 remains a challenge, despite three rallies to $1,450. The threat of additional tariffs on China resulted in the second and third test of $1,450.
Friday’s price action closed with a Long Legged Doji candlestick, which is indicative of indecision. The Flag Tilt is riding atop the 21 EMA, as all the EMAs remain lined up with the stars. The DMI-ADX remains positive but indecisive. The StochRSI and Momentum may be showing signs of life after chopping south throughout the Flag Tilt, and the Volume has been steadily increasing since Thursday when additional tariffs on China were put on the table. This week will be telling after Iran seized another oil tanker in the Persian Gulf and tragic mass-shootings occurred over the weekend that are sure to create more political upheaval stateside. I remain bullish in the near-term, and the next level of resistance at the $1,483 Fibonacci is within striking distance.
As a reminder, nobody cares about silver until it breaches $21.50 with conviction.
- $1.1 Million In Gold Bars Stolen From Canadian Home Near U.S. Border – Kitco, Jun. 30
- West VA Starts Treating Gold & Silver as Money – 10Th Amendment Center, Jul. 1
- The Nomination of Judy Shelton to the Federal Reserve board – POTUS, Jul. 2
- The quiet campaign to reinstate the gold standard is getting louder – Quartz, Jul. 3
- Mark Mobius: The Place to Be Is in Stocks and Gold – Bloomberg, Jul. 4
- India Budget 2019: Gold import duty hiked to 12.5% – The Hindu, Jul. 5
- Trump Says Fed ‘Doesn’t Have a Clue’ – Bloomberg, Jul. 6
- Poland joins Hungary w/Huge Gold Purchase & Repatriation – BullionStar, Jul. 7
- Weaponizing the Dollar in defense of American hegemony – Consortium News, Jul. 9
- AOC Got Chairman Powell to Admit Phillips Curve no Longer Works – CNBC, Jul. 10
- Trump’s Concern About Strengthening Dollar in Fed Interviews – Bloomberg, Jul. 10
- LBMA: London’s gold market is more liquid than bonds – Reuters, Jul. 11
- Gold In a New Bull Market — and It’s Heading a Lot Higher – Barron’s, Jul. 12
- Robot Trading Will End in Disaster – Jim Rickards, Jul. 17
- The Gold Rush Heats Up as Sub-Zero Yields Spread – Bloomberg, Jul. 19
- The Reasoning Behind Gold’s Breakout – Alasdair Macleod, Jul.25
- ECB and SNB say formal gold selling pact no longer needed – ForexLive, Jul. 26
- Airport of Garulhos in San Paolo (Brazil): Military command steals 752 KG of Gold destined to USA and Switzerland (value 30 Million USD) from Brinks facilities – Jul. 26
- US, EU, China To Revalue Gold In New ‘De Facto’ Gold Standard – GoldCore, Jul. 29
- Russia Added 600,000 Ounces of Gold To Reserves in June – BGASC, Jul. 29
- Gold the Ultimate Asset as Fed Joins Race to the Bottom – BullionStar, Jul. 31
- 1H19 Gold Demand At 3-Year High by Record Central Bank Buying – WGC, Aug. 1
- Maybe We’re All Gold Bugs Now – WSJ, Aug. 1
- Economists utterly confused about what’s next after .25 Fed rate cut – CNBC, Aug. 1
- Markets overlooking bullish development in the Fed’s policy decision – Yahoo, Aug. 1
- Fed nominee Shelton says global economy in ‘very dangerous situation’ like 1930s – CNBC, Aug. 1