Gold - A negative market - where next? | 5 March
Gold Price Forecast relative to
Long Term Monthly (LT-M) - Medium Term Weekly (MT-W) - Short Term Daily (ST-D) - and Hourly (not shown) data.
(Previous week in brackets)
|Au Trend||↓ (↓)||↓ (↓)||↑ (↓)|
|Au % Risk
|53 (61)||25 (28)||16 (52)|
Total allocation 50% (55%)
Physical Gold: Nature's currency
5 March close: Even though gold is under pressure price has nearly traveled the same $310 length (july-Nov 2020 drop 2075-1765) from the most recent January $1960 high. With Daily risk turning up this week gold is not deeply oversold but is finding mild support. We only see an allocation consideration watching an unfolding price relationship between the precious metals. Platinum still appears strong against both Gold and Silver even though we are in a correction following the strong platinum advance in 2020 and into February this year. The gold narrative in mainstream and alternative media is focussing on unpredictable fundamentals with bitcoin taking on the role a the modern day inflation hedge. It may be a tough call and we would only look to maybe shift a little bit more Gold into Platinum. Such trade is to potentially benefit from price dispartity against the cost of storing physical. See the comment on the various ratios in this week's Platinum and Silver blogs. The core gold position remains unchanged for now as we need to see risk weight develop a bit more and economic conditions unfold under the helicopter money umbrella. Technically Gold is still a very long term play where both Gold and Silver are spot on the long term inflation trend. Platinum is still undervalued long term.
26 February close: A nearly 3% or $50 drop during the week. The Gold price pattern of sharply weaker prices during just a few trading days has now repeated itself 5 weeks in a row and that pattern started as Crypto peaked in early January. The stronger inflation outlook based on rising long term yields just during the last 10 days and a weakening dollar made Gold coming back up every week. Same this week again where Gold had just started a little uptrend from being technically short term oversold but tanked on Thursday and Friday. This has put our risk weight in a bit of a technical danger zone as all time frames are now pointing down. Our portfolio is long from a substantially lower level which makes our narrative to stay fully committed a little easier to defend. It looks like traders with more diversified portfolio's are exiting on higher USD yields and short term weakness in other major asset classes including crypto. For investors with entries around current levels we see no immediate reason to unwind as risk in most financial asset classes is still very high, whilst unlimited monetary expansion is continues to be part of worldwide stimulus packages. Medium Term risk is very moderately pointing down and also hitting low risk weight zones. Physical Gold must therefore remain a critical hold in our portfolio. No Change.
5 March comment
The Interim quarterly Gold hart is virtually unchanged from last week and pointing down supporting price weakness. The picture looks like 'deja vue' based on a fairly rapid risk weight drop without much, relatively, price change. The pattern breaths higher prices in coming quarters although the current slump could continue a while longer.
Gold/Euro live price
5 March 2021 close: The chart and risk weight picture for Gold/EUR is very similar to that of Gold/USD and the same analysis applies. We will possibly seek to add a small percentage of platinum and release some gold. Both metals are still well above our entry levels with Gold at $1220 and Platinum at $900.
26 February 2021 close: Gold/EUR showed a very similar pattern of course losing just 2% for the week from 1466 to 1435 benefitting from a slightly stronger dollar. Real chart support unfortunately only comes in at around 1320, but this development now coincides with developing bullish risk weight divergence in daily timescale and where Medium term weekly risk is already in an oversold range with slowing momentum. No Change
Gold/British Pound live price
5 March 2021 close: GBP still looks the weaker currency against gold even though GBP has behaved contrary to the risk weight picture. That historically results in 'pay back time'. It means we are on a tack course against the trend. It is like having headwinds sailing from the Canaries to the Caribbean where the primary wind direction is genarally more easterly. It means GBP is likely to turn south again against most majors except perhaps the USD,
26 February 2021 close: Gold GBP is a definite hold as Medium and Long term risk weight is near oversold having lost substantially since the very weak GBP Gold high in August 2020. The current Gold/GBP price of 1240 is still well above the 700 low and which started the present long term uptrend back in Dec 2015. No Change.