Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Gold Hits the Horizontal - And Bounces
August 18, 2022 - (Gold Market Wire) - Gold hit our horizontal support at $1760, and bounced up higher. For now, we are holding. But, make no mistake, the technical picture is weak.
So, the charts worked again, and simplicity of technical analysis has triumphed over "fundamental" analysis that says "Gold to the Moon-The US Dollar is Finished!" Now you know why good traders always say leave your emotions at the door when you enter the trading room. If $1760 falls we have some more support at $1750 and then a grind lower.
May a word to the wise be sufficient. Equities are rising in a manner which usually foreshadows something bad about to happen. We are entering the dark period soon, as well. That period in late-August to end-October where nasty things always seem to happen - like 1929 and 1987 and a lot of other sell offs. To everything there is a season 'sell sell sell', could be the new mantra. If we get such a blow out, Gold is going to go with it as well. Nothing (save, maybe, energy) will be spared.
We remained flat and are happy we are. We'd rather wait for the blow-out and see what lies scattered around 'on the cheap' after the maelstrom. If it doesn't happen...well, we will deal with that in due course. But this is no time for heroics. Gold could be setting up for a bad thrashing.
Within that context, and the context of energy, we'd like to submit the following:
The holidays will soon be over, and the real world will be rearing its ugly head again. We are now engaged in a kenetic and non-kinetic war of very serious proportions. Putin must realise that he must press his advantage against a fractured western world, that sees the United States political scene engaged in cross party vitriol that even Washington usual cannot muster, an EU that stands at the door of bankruptcy with a failing currency; and a UK about to go on an endless series of public sector strikes that will crucify what remains of its barely functioning economy. Putin must know, the time is now, to strike and cripple the western world economy. It only makes sense. He simply cannot miss the present chance and allow the Western world to grasp recovery - only to embolden itself militarily against Russia itself. Thus he is likely to press his 'energy advantage' to hamper the economies of his enemies. That means spiralling energy prices.
The recent sell-off in crude remains unconvincing. Truly, the sudden disappearance of the bid-side of the market over the past few weeks, looks not like length closing out of the market, but, instead, looks like a gigantic fade for the buy-side to accumulate at lower prices. We offer no scientific proof of this - but merely comment on it after some 30+ years of trading oil. We smell a rally in the making. One that could cause price of Brent to climb to $150 and higher - and yes, we may get the mother of all sell-offs first, so sizing a position of length has to be balanced against the potential for a significant move lower, leading to a sling-shot higher.
In the current environment, one small "match-stick" could set the energy complex on fire - even given its already lofty state. Saudi Arabia's recent commentary that spare capacity within OPEC is fast approaching zero, is just further kindling.
The next is six months is likely to be historic - by any stretch of the meaning of that word.