This morning, something popped up… and it was Gold. A minor pop, nonetheless, a breakout. Perhaps the start of the last burst of this first leg…
In the 4hourly Gold futures chart (left panel), a spike and close out of the triangle was a continuation of yesterday’s market fear. On Monday, the US market was reminded of the usual headline fear and before market open, Gold had started moving upwards. The fear festered into the afternoon and even after the close, Gold continued to be the safe haven. The local early morning spike and consequent breakout was probably due to the Australian, Japanese and Chinese markets digestion of the growing fear… the breakout was firm with the MACD crossing up. The Gold futures daily chart (right panel) shows the committed upside target achievement well above 1500, nicely with a Gap Up. We would like to see a continuation of the run, well above the gap. This comes despite the rather parabolic extension of Gold recently, which belies the undercurrent fear.
In the daily chart, we can see the previous marked entries, last two being real trades. Although this morning had a Buy signal on breakout, common, rational and risk sense did not allow a real trade…
Looking at the Gold weekly chart, it is evident that the recent bull run is strong, but also somewhat overextended and parabolic. Entry would not be near ideal as risk reward ratios would be unfavorably inverse. Fund flow analysis was incorporated to the weekly technicals and it appears that Non-commercial buying had been on the rise, and is at a recently elevated level. On the contrary, the Largest 8 Net appears to be slightly short. Broadly speaking, Gold may be at a point where the largest traders are offloading supply to Non-commercial demand.
However, the bigger picture is still intact for Gold, with multi year upside apparent in the Gold futures monthly chart. Including fund flow analyses, technicals align to a multi year high, targeting about 1700 in the next 6-18 months.
In summary, Gold has been the hottest topic and metal since June, gaining sting momentum over the past two months. Here is the key: while Gold is hot now, and new investors who missed the jump start want to get in… the most important question is not about when to get in, but rather HOW to get in. Many will miss this point due to FOMO (a recent abbreviation for the term Fear Of Missing Out) and the usual market dynamics would happen. Therefore, planning well in advance, setting rules, and managing the risks are not essential, but highly critical. Case in point, reviewing my older posts, you would see that I spoke of Gold as far back as late last year, in 2018.
Do note that there are other precious metals like Silver, etc. each has its own story.
For now, watch for opportunities to enter in Gold… it will come… soon.
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