Gold got hammered again today, losing $48 an ounce to close at $1,677, but we see no reason to panic. The focus now is on a band of support between $1,665 and $1,680. Should that fail, a test of the trendline (around $1,625) is likely, and what an opportunity that could present. Some buying came into the producers today after the TSX Gold Index touched 391. It finished at 397, down 4 points. When one looks at the oversold conditions in such situations as Kinross (K, TSX), which has fallen in 9 out of the last 10 sessions, and New Gold Inc. (NGD, TSX), just to name two, a reversal in Gold itself can’t be far off. It’s worth noting that the HGD reverse ETF (Gold Index) came very close to its declining 100-day moving average (SMA) today where it has encountered resistance since late July.
John updates the Gold chart below. We expect the long-term trendline support to hold.
Could you comment on:
NEW YORK (Commodity Online): Gold price is expected to reach $1800 in November, top out and then fall to $1000-$1200 by April or May providing a big buying opportunity, says John Taylor of FX Concepts LLC.
John Taylor is the founder of FX Concepts LLC, the largest currency hedge fund in the world and had earlier predicted in July that gold will reach $1900/oz. Gold prices had rallied from $1500/oz in July to $1900/oz in Aug-Sept. However, prices have since crashed and gold is now trading at around $1625.
He however pegs gold to reach $1800 by November next month.
November “looks to us like a cyclical high for risk and for us that would be almost a perfect time for Gold to have its cycle peak. Then it’s going to be weak after that. That sort of fits in with our forecast which is really negative for the economy next year”, Bloomberg quoted Taylor
On his prediction of gold reaching $1000-$1200 in April-May, Taylor says“I think it’s probably a big buy. There’s nothing to stop it from going up. Monetary systems are grotesquely screwed up, especially in Europe and also in the U.S. There’s going to be an awful lot of confusion going on for the next decade.”
Comment by Pete — November 22, 2011 @ 4:19 am
Hi Pete
I let the charts talk to me. By that I mean I try to read it’s signals. There is nothing on the charts to indicate a severe correction is coming. I am not saying there will not be one but there are no chart signals to that effect at the moment.
The indication for a correction would be a confirmed breakdown of the longterm bullish trendline which has been in place since the crash in 2008.
Comment by John - BMR — November 22, 2011 @ 11:01 am
Thanks John I appreciate the feedback
Comment by Pete — November 22, 2011 @ 1:02 pm