Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Price Major Correction Coming?

Commodities / Gold and Silver 2010 Mar 12, 2010 - 04:35 PM GMT

By: Julian_DW_Phillips

Commodities

We are hearing from some sources that the gold price will tackle previous highs then fall to $850. We did hear this before gold rose to $1,100, with many believing that then there would be a correction to $850, but it didn’t happen then either. What happened was that gold held its ground then broke upwards through resistance to set itself on track for higher prices.


If previous highs are hit and if a double top is formed, then a major correction could come about. But there are two ‘ifs’ there, which is not solid ground on which to stand.

It is at these times when we bring in the fundamentals. Many will say that the Technical picture can stand alone. Well in a situation that has to read a Technical picture still to come, that would be dangerous.

In the last few years the gold market has changed considerably from essentially a market where there was little investment interest to one where investment interest dominates the market. That investment interest is now at Sovereign wealth fund and central bank level, areas well beyond past market shapes. Past shapes defined the Technical patterns we now see. Technical patterns that are now being set are based on a far bigger, different natured market too.  The Technical picture is still very valid, but must be tempered by the new fundamentals. So let’s not ignore these changes when assessing future price moves.

One only has to watch the media, written and watched to see that it is so easy to fall victim to persuasive, if unbalanced presentation. TV journalists in particular have to present a story, one with drama and presence, simply to keep the audience watching. This can easily detract from realities. For example, Mr George Soros was accurately quoted as saying that gold was the “ultimate bubble”. The press interpreted that as him discrediting gold. However, to the contrary he was pointing forward to the future of gold, when it would become the “ultimate bubble”. How do we know, simply because he has been buying the shares of gold Exchange Traded Funds and shares in Nova gold, a gold exploration company. So it is more likely that he is buying into gold with a tremendous gold price rise in view. This is now obvious, but to date we have not seen a change in the views on his position. He’s read them, better than they read him.

Likewise, we take the Technical picture and the fundamental picture together before we come to a conclusion. Here’s the scene now: -

  • Investment demand is rising and from old money as well as new [see our forecast on European institutional and retail demand for 2010]. It is buying anonymously and through the Fix in London so as to stay below the radar.   Why?
  • The problems of the € are not going to go away. They are structural. With national interests clashing with Eurozone interests among all members over money, only words of support are coming forward, no action. Confidence in the € is waning, no matter what politicians are saying.
  • U.S. $ problems have not changed and there is little political will to attend to the ailments of the $, riveted as they are on internal matters.
  • The $ and the € will display a semblance of stability in the days ahead as it is realized they are both gliding down together in terms of confidence.
  • China is growing rapidly and has become self-sufficient in terms of internal growth. Exports remain important to them, hence the U.S. $ ‘peg’ system they currently operate. Therefore, what they can’t afford to do is to let the Yuan rise strongly against all currencies. Yes, we do see an eventual lifting of the ‘peg’, but only when the Yuan will not rise strongly against the U.S.$. This can only happen if Yuan are gushing out of China to such an extent that the currency will either fall or hold around current levels.

In such an environment of uncertainty and doubts about the future, it is unlikely that there will be a great exit from gold. It is far more likely that gold will remain attractive as long as the world is in the present state.

Now look to the Indian sub-continent. Indians are well known for their caution when it comes to buying gold. They are very careful not to buy if there is a likelihood of the gold price falling heavily. They have been out of the market during the bulk of the consolidation we have just weathered. Last year imported gold was extremely low and the market supplied to a large extent by scrap gold. Now they are turning buyers again. History tells us that they believe we have seen the low around $1,050 to $1,100 and that price forms good support. In addition the Chinese are inherent savers and have only recently been in a position and a government encouraged one, to buy gold. Both nation’s governments are steady buyers of gold as evidenced of late. Certainly they would treat any fall in the gold price as a buying opportunity.

So the conditions which would support a major correction in the gold price are not present. Should a correction from a failed attack on recent highs occur in such an environment it is likely to be a short one.

What are the likely price moves of gold going forward?

Subscribers only

2010 gold prices forecast.

For Subscribers only – We are in the process of forecasting prices in 2010 in - Chinese retail demand - Indian retail demand - European retail and Institutional demand - U.S. retail demand.

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter. To subscribe, please visit www.GoldForecaster.com

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2009 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules