Speculating on Gold's Bearish Potential
We are looking at the monthly chart today for gold, and see quite a bit of potential bearish movement in this chart. Gold is returning to the 0.500 retracement of the bull market which started in 1999 and ended in 2012. If gold elects to punch through the 0.500 retracement at 1087 then we will likely see $891 at the 0.618, and potentially $611 at the 0.786.
Increasing public confidence in risk-off assets, and especially in American risk-off assets, will continue to drive the price of gold lower. The dollar will continue to rise as it has, due to and influx of capital from foreign countries. This influx of capital will occur in attempt to seek safety from increasing taxation.
As dollars are purchased in foreign currencies, pushing the value of the dollar up, the dollar price of gold will fall, or the gold price of the dollar will increase. Individuals will need these dollars in order to purchase dollar denominated assets, such as stocks or USA government bonds.
We would like to stress that in the long term, we are very bullish on gold. However, it is not yet gold's time, and there may be some very good opportunities in the near relatively near future for purchasing physical metal. This appears to be the market positioning to rally a third, likely extended, bullish wave.
But for trading purposes, we see a brief correction in store before a return down. We are calling for gold to return to the $1200 zone and then decline to $1115. In the next few months.
Increasing public confidence in risk-off assets, and especially in American risk-off assets, will continue to drive the price of gold lower. The dollar will continue to rise as it has, due to and influx of capital from foreign countries. This influx of capital will occur in attempt to seek safety from increasing taxation.
As dollars are purchased in foreign currencies, pushing the value of the dollar up, the dollar price of gold will fall, or the gold price of the dollar will increase. Individuals will need these dollars in order to purchase dollar denominated assets, such as stocks or USA government bonds.
We would like to stress that in the long term, we are very bullish on gold. However, it is not yet gold's time, and there may be some very good opportunities in the near relatively near future for purchasing physical metal. This appears to be the market positioning to rally a third, likely extended, bullish wave.
But for trading purposes, we see a brief correction in store before a return down. We are calling for gold to return to the $1200 zone and then decline to $1115. In the next few months.
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