Gold Making Usual Seasonal Low for First Week in July
Barry Dawes of Martin Place Securities looks at the current state of the gold market, which is at a seasonal low.
The seasonal low is here?
Key Points
Gold
Gold fitting into seasonal lowsWedge is tighteningVolatility remainingGold Stocks
Backtesting wedge upside breakoutTSX-V shows some lifeASX Gold stocks
XGD downtrend brokenBacktesting wedge upside breakoutBonds
Brinkmanship from market playersBreaking up or breaking down?Yields?Bond prices?Reversals can come very quickly from these technical positionsUS$
Still strong and heading higherGold
Volatility continues in gold into this seasonal low period.
More very constructive bottoming action with this wedge. Test of the downtrend, and last Thursday might have been a reversal.
If this is, in fact, a C Wave completing Wave 2, then Wave 3 is directly ahead. Maybe a sharp rise is in store for gold.
A bit more work to be done here but a breakthrough US$1940 basis the futures would be technically very important.
The power build-up here in this narrow trading range should be enough to send gold to a new high.
This still looks robust and ready to break much higher.
Gold stocks
As noted, this has been an unusual correction with a second series of five waves down.
It bottomed nicely on the downtrend and has broken quite powerfully through the wedge.
It is now backtesting.
Not quite the same pattern here on ASX, but it is a break-out and backtest.
Keep watching this Canadian Junior market.
It seems to be about to move higher into its own Wave 3 as well.
Bonds
Bonds are important in the marketplace, and their price and yield directions could affect gold.
But how is simply not clear.
It doesn't really matter, but it has certainly been an interesting time watching this battle pan out!
Brinkmanship continuesEvidence could be pointing to resumption in bear market for bonds as yields riseOr notCould be all just overboughtBut note that trend reversals can come quickly from these technical positions10-Year bond
Yields about to break higher?Or just overbought and peaking?
30 Year Bond
Yields about to break higher?Or just overbought and peaking
TLT 20-Year T Bond ETF
Backtesting and breaking upor breaking down?OversoldReversals from technical positions like this can be very sharpUS$
Still rising again.
Because U.S. assets are cheap?
Timing is everything.
Heed the markets, not the commentators.
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