alice

NFTRH; A Close-in View of Gold

We have been looking for the pullback to reach the 1180’s using the weekly chart and it’s EMA 75.  Gold has reached the more general shaded support zone.

gold.wk

The metal was a bit negative this morning until the Home Price data came out, probably putting the spook into people about inflation.  Gold turned up while stock markets and commodities stayed down.  Personally, I don’t think this is market moving news for gold beyond an upside reaction, but the chart above says gold has already done some halfway decent corrective work to this point.

Let’s dial in the daily.  Yesterday it came close to the 1200 round number and the 50 day moving averages.  That theoretically could contain the downside, but whether the expected 1160-1180 is to come about or not, the price risk (short-term downside) vs. reward (longer-term trend change) is not too bad.

gold.day

Of more importance, with gold steadying and stocks reacting negatively this morning, the Gold-SPX ratio would continue to be in a bullish looking consolidation.  That is a big consideration in our macro view, and it is intact.

What this serves to do is provide confidence in the process of taking positions in quality gold miners.  If oil and stocks were rocketing on the news for instance, I would have more caution about the situation.

I’d continue to hope for HUI 140, GDX 16.50(ish) but individual miners are going to drop and pop at their own rates.  In order to be a buyer at supports, it would be important to have the macro playing ball.  Also, when viewing the above chart as ‘GLD’, you’d see a big gap down from last week.  Same with GDX, so we cannot rule out a big short-term bounce to fill those gaps but later on a resumed downside.

A little perspective for your consideration.