Gold/USD price risk is to weaken next week | Update close 10 July

Prediction for Gold and Silver at close 10 July, 2020

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)

1797 (1773)
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
93 (93) 93 (92) 82 (82)
Allocation 70% (100%)

Gold/USD live price

July 13: Temporary reduction of the Gold position

The 1809 close on July 8 was the highest since Sept 2011. The trend is not finished but with daily risk turning down on bearish divergence for a second time this week we take 30% off the position just to allow for a stronger price reaction and with a view to re-enter relatively soon. Maybe the re-entry will be in Silver/ This is the first sale since entry in October 2018.
We expect Mt Weekly to show bearish lower risk to higher price divergence before an intermediate peak is reached. This partial exit is seen as a trading opportunity an d taking out some real risk to a stronger than expected price reaction in the short term time frame which could be $100. The picture ag Euro and Swiss Franc is similar and confirm this potential risk.

03 July: At a Gold price of 1782, Gold vs USD recorded the highest quarterly close in history.
At 1768, it wasn’t quite the highest London PM fix which was recorded on September 30 2012 as Gold rallied to a primary high versus many major fiat currencies except the USD which made a secondary price high that 3rd 2012 quarter. Below is the quarterly Gold/USD chart updated for June 30, 2020 showing a risk value of 96.

With all time frames in the overbought risk weight zone, what is the technical narrative today? Are we at risk of a major drop in the Gold price versus USD?
During the major primary Gold rally between 2004 into Sep 2011 gold peaked several times in a similar fashion. As shown on the quarterly chart the March 2004 risk weight peak at Gold $423 came after just a 70% rally from the post 1980 low in 2000 at $250. The current rally, as there is no peak yet, is still on track after a 68% rally from the Q4 2015 low.
Because these long term Gold measuring timeframes are in the overbought zone, it is extremely likely that one of the shorter frames, i.e Weekly and Monthly, let alone daily will first diverge several times before a final peak will be printed. Therefore, the answer = ‘possibly but not for very long’. This is 2004 all over again with Monthly and weekly time frames showing similar risk weight data.
The Gold/USD market looks as solid as it did 15 years ago and the greater risk as discussed before is for price to surprise again with a huge lift. We could make projections based on Fibonacci ratios, but that is meaningless at this point. We shall remain very patient and need to see at least some bearish divergence in the Longer term time frames before calling any intermediate top.
Having said that, Gold against other major currencies has already showed intermediate bearish divergence, but these also are more likely to appear as a pause in the long term trend.
No Change in staying fully invested


(Previous week in brackets)

18.68 (18.00)
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
75 (70) 90 (88) 85 (70)
Allocation 100% (100%)

Silver/USD live price

Silver was a little stronger this week and the picture is somewhat similar to gold but carrying more long term upward momentum. The first real objective is still 21.15 and we stay fully invested.

03 July: The Silver price continues to lag behind technicals calling for a more rapid advance for some time. Risk weight and trend direction still favors the upside and even more so than gold.
This also applies to the Silver quarterly risk weight ending at 70 on June 30 with some way to go.

As price could be anywhere on the upside whilst this trend continues long term, silver remains a strong hold. The first objective is 21.15 and then 35.50. The same picture can be visualised for Silver vs other major currencies with Monthly risk weight in a strong uptrend still. Daily risk was trending up (hawkish) again last week but turned down again on Friday. Support is at 17.00 and the technicals would rather anticipate a further pause followed by bullish divergence again. No Change on Long term hold

GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

95.72 (98.03)
Trend ↓ (↓) ↓ (↑) ↓ (↓)
% Risk
40 (43) 13 (14) 14 (32)
Allocation 50/50 AU/AG (50/50 AU/AG)

Gold/Silver Ratio live price

Gold/Silver ratio support at around 80 and then 64 is where we aim this ratio to go. Both Daily and Weekly risk is getting oversold and are expected to first show intermediate bullish divergence to seriously challenge the current Gold/Silver ratio downtrend that started after peaking at 128 on 18 March, 2020. In line with our 30% Gold/USD allocation reduction and staying full with Silver/USD the ration clearly leans in favor of Silver running up faster than Gold in the next few months. NO change.

03 July: The ratio is again losing momentum which is entirely due to the sense of more silver price manipulation. With the weekly risk trend still up at the lower end 0-20 range at 14 and Monthly strongly down we must give ther Long term Monthly benefit of any doubt. For now. This picture can change dramatically in favor a weaker Ratio in case the silver price does show more upward momentum. If that doesn’t happen we could again be in for a longer wait towards recent equilibrium at around 60. No change

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