Panic – what panic? Not according to gold!

Gold - daily chart
Gold – daily chart

Panic – what panic. Not according to the price of gold and whilst other markets have seen extreme volatility with equities plunging, currency pairs opening gapped down, and the VIX moving violently, gold has continued to remain calm and serene throughout, with hardly a murmur to reflect the turmoil around. Strange then, considering gold is the ultimate safe haven, that even in these turbulent times the precious metal has failed to react or find any upwards momentum whatsoever. In fact, quite the reverse with the metal moving lower once again overnight and into this morning’s session, and reinforcing once more the lack of buying interest, thereby confirming the longer term bearish trend remains firmly in place. Indeed, if any more evidence were needed of the decline in the status of gold, the last few days have highlighted this once more, as it continues to trade in a tight range with the platform of support at $1175 per ounce continuing to hold firm for the time being. Any move through here is then likely to see gold prices test the $1162 per ounce area where a much weaker support region awaits.

Gold - weekly chart
Gold – weekly chart

Moving to the weekly chart, the deep resistance overhead in the $1220 per ounce area continues to hold, and indeed in the last two weeks, has remained untested as gold struggled to clear the $1200 per ounce level. Volumes remain average, and even last week’s down candle failed to attract heavy selling volumes on the wide spread down candle. The key level below remains at $1164 per ounce, with a move through here opening the way to a sustained fall which is likely to see a test of the $1142 per ounce region in due course. The series of pivot highs on this chart also confirm the current weakness of the last few months, with the most recent arriving two weeks ago following the rally and immediate reversal for the metal.

This is not what gold investors want to hear no doubt, but this analysis is symptomatic of the malaise which surrounds gold from an investment perspective. Perhaps even more worryingly for longer term investors, even the decline in the US dollar yesterday, which opened gapped up before selling off during the remainder of the session to close with a wide spread down candle on the daily dollar index chart, failed to provide any impetus.

By Anna Coulling

Charts are from NinjaTrader and the trading indicators from Quantum Trading.

About Anna 1055 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

3 Comments on Panic – what panic? Not according to gold!

  1. Anna, gold and silver is rigged by these banks, two telephone calls a day, Jp Morgan has millions ounces of silver which they can throw at the market any time.
    Any one with etf’s in g or s are bonkers, it reminds me of the goldsmiths of years ago?

  2. Is this a sign that gold is beginning to lose its shine as a safe haven, or more a reflection of just how complacent the markets have become.

    • Hi Marcus – I believe one of the prime reasons at present is the lack of inflation, which is traditionally one of the primary drivers for the metal. At present in the current low inflation environment, gold has certainly lost its shine in this sense. Once we begin to recover from the deep recession and inflation drives interest rates and economic growth, then gold will once again start to recover from the current long bearish trend which looks set to continue for some time to come – all best – Anna

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