Gold - retraced from long term down trend line
Gold retraced from strong resistance down trend line at 1322 and is looking for a correction. Today the stock market has lost a lot value but doesn't look like that the money goes into gold.
The market sentiment on gold is currently becoming irrationally exuberant. The indicators for gold are overall much bullish than at just over 96 percent of the trading days since the year 2000. From the perspective of analysts this is not too good. The analysis of the past two decades has shown that the precious metal often faced problems when the bullish sentiment on gold was as extreme as it is today. In particular investors should consider that the average recommended gold market risk is in the subset of short-term gold indicators. Currently, the value is 68.8 percent - almost three times the average index level since 2000 of 24.7 percent.
Exactly these indicators are evidence of the building up gold reserves in the gold mines. Gold traders reminded customers of the resumption of a gold rally despite the setback last Monday and reiterated that the precious metal would surpass the 2018 highs. If you look at the performance of the Gold Mining Stocks VanEck Vectors Gold Miners ETF you will notice why many analysts are concerned. Since the year 2000, this has done much worse after peak levels than on lows. The contrary analyzes are merely short-term indicators that weight just a bit on the longer-term outlook for gold. Longer-term forecasts can therefore only be made with the help of other indicators, such as inflation
Inflation as an indicator
Gold's recent rally came just as inflation fell. This reinforces the contrarian conjecture that "the fundamentals were not behind the recent rally of gold." Since the gold price increase of around 140 US dollars at the beginning of October, the expected inflation over the next ten years has dropped from 2.17 to 1.85 percent. In the short term, I predict a decrease of the gold price - or inflation will rise again.
The market needs to be re-analyzed when resistance at 1322 $ breaks and daily candle close above this trend line
The market sentiment on gold is currently becoming irrationally exuberant. The indicators for gold are overall much bullish than at just over 96 percent of the trading days since the year 2000. From the perspective of analysts this is not too good. The analysis of the past two decades has shown that the precious metal often faced problems when the bullish sentiment on gold was as extreme as it is today. In particular investors should consider that the average recommended gold market risk is in the subset of short-term gold indicators. Currently, the value is 68.8 percent - almost three times the average index level since 2000 of 24.7 percent.
Exactly these indicators are evidence of the building up gold reserves in the gold mines. Gold traders reminded customers of the resumption of a gold rally despite the setback last Monday and reiterated that the precious metal would surpass the 2018 highs. If you look at the performance of the Gold Mining Stocks VanEck Vectors Gold Miners ETF you will notice why many analysts are concerned. Since the year 2000, this has done much worse after peak levels than on lows. The contrary analyzes are merely short-term indicators that weight just a bit on the longer-term outlook for gold. Longer-term forecasts can therefore only be made with the help of other indicators, such as inflation
Inflation as an indicator
Gold's recent rally came just as inflation fell. This reinforces the contrarian conjecture that "the fundamentals were not behind the recent rally of gold." Since the gold price increase of around 140 US dollars at the beginning of October, the expected inflation over the next ten years has dropped from 2.17 to 1.85 percent. In the short term, I predict a decrease of the gold price - or inflation will rise again.
The market needs to be re-analyzed when resistance at 1322 $ breaks and daily candle close above this trend line
The analyses provided are for informational purposes only and do not constitute financial advice or recommendations to buy or sell anything. The information presented is based on personal research and interpretation.
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