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
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
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

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Bounce Goes Nowhere

Commodities / Gold and Silver 2011 May 15, 2011 - 07:38 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleWell, the gold bounce went nowhere, momentum and volume action were unimpressive.  So, what’s next?  I would suspect more downside action before things settle down, consolidate and then move back into new highs.  But that’s only a hope, not a prediction; unless it happens in which case it was a prediction.  An analyst’s first priority is to write in such a way as to be able to say “I told you so” regardless of what happens.


 From the long term perspective gold is still not in much danger of a major trend reversal.  The price is heading lower but is still some distance above its positive sloping moving average line.  The momentum indicator is also moving lower and is already below its negative sloping trigger line, however, all this is still happening well inside the positive zone suggesting weakening but not reversal.  As for the volume indicator, it seems to be more into a lateral trend and remains above its positive sloping trigger line.  So, as far as the long term rating is concerned, at this point in time it remains BULLISH.


The intermediate term is still in positive shape but much closer to a possible reversal than the long term.  Here, gold touched my intermediate term moving average line the previous week and bounce up.  That bounce did not go far and it looks like gold may be ready to take another tumble on the down side.  For now it is still above its positive sloping moving average line.  As for the intermediate term momentum indicator, it is moving lower but remains above its neutral line in the positive zone.  It is, however, below its negative sloping trigger line.  The volume indicator remains positive above its positive sloping trigger line but not that much above.  A few days of negative action and it just might move below the line.  Today, the intermediate term rating remains BULLISH.  This is confirmed by the short term moving average line remaining above the intermediate term line. Here too things could change with a few days of negative action.


As we see from this week’s chart the bounce did not last long.  For those who look for such things the bounce looks very much like a 50% retracement of the previous plunge.  Nothing about the bounce was encouraging and the odds are for more downside action.

For today gold remains below its negative sloping short term moving average line.  The momentum indicator is back in its negative zone and below its negative trigger line.  The daily volume action has not been very impressive and needs to improve for any bounce or rally to have any longevity.  We see on the chart an upward sloping wedge pattern which unfortunately has a habit of breaking on the down side.  Putting it all together the short term rating is BEARISH, confirmed by the very short term moving average line.

As for the immediate direction of least resistance, baring any global upheaval during the weekend the direction of least resistance seems to be towards the down side and that’s the direction I would guess.


Silver has had a sharper plunge and a weaker bounce than gold.  Intra-day wise it even made a lower low versus the plunge low, during this past week.  I guess what goes up the fastest comes down the fastest.  By all accounts, looking at the chart action, more downside can be expected.  I would look at $27 to $31 as a range of serious support.  Baring that range the next step would have to be the $18 level.  Do we really think it would go that low? 


I know that probably 100% of my readers look to the major, most popular Gold Indices to get their bearings as to what is happening in the overall gold stock market.  I look at my own Indices and especially the Composite Index for an understanding of what’s happening, overall.  While the major Indices are now at a slightly lower level than their peak of early 2008 the Merv’s Composite Index of Precious Metal Indices is still some 32% above its previous peak.  This is the difference in overall average performance of the 160 stocks in the Merv’s Index versus the weighted performance of the few highly weighted stocks in the major Indices.  Precious metal stocks have been doing a lot better than these major Indices have let people to believe. 


The Merv’s Composite Index is, however, showing a real danger potential ahead.  Depending upon the indicators one uses the long term rating for this Index is now BEARISH.  However, to confirm such bearishness I would wait for the long term momentum indicator to drop into its negative zone (which could be momentarily) and for the Index to break below its resistance lines.  There are two of them but a move to the 450 level on the Index would break below both.  We have an up trending wedge pattern which is most often broken on the down side.  We have a support which may or may not hold.  So, I would still not be in panic mode but would be pretty close to it.  Of course, in the end one would look at the individual stocks before acting.  There are always stocks that move counter to the prevailing trend but I would not risk money on it.  Get out when the charts and indicators tell you to and protect your capital.  Precious metal stock speculation (and it is all speculation, even stocks such as Barrick) is a risky business, no need to take greater risks than you have to.

Merv’s Precious Metal Indices Table

Well, that’s it for this week.  Comments are always welcome and should be addressed to

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 - 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