Gold 2016 Targets 1200 – 900 Levels

Gold to target $ 1150 – $1215 level first?

Gold Weekly

2014 – 2015 clues and hints:

  • Ever since 2014, there are 2 short covering peaks in each year
  • Q1 2015 peak is always lower than previous June 2014 peak
  • June 2015 peak stands at 1200 – 1215 levels (Potential Sell  Zone) for Q1 2016 peak?
  • Overall trend remain bearish therefore price rise is only temporary

Fundamental possibilities that could trigger a Q1 rally are:

  • Correction in equity market?
  • Dollar strength curtailed by any further need of another rate hike
  • Further short covering period could go underway
  • Seasonal demand and central banks purchase
  • Cut in production set to kick in (Producers looking to sell their produce at higher price)
  • Money flow into commodities once again as the new year kicks off
  • VIX could land a helping hand if the fear index trigger safe haven buying (see chart below)
  • An unforeseen black swan event?

Technical possibilities and projection that could support a Q1 rally are:

  • Need to break back above the channel (a break above 1088)
  • Rally comes in the form of the initial first run followed by a pullback and then a second rally
  • Watch weekly RSI for clues of a buy able pullback
  • The current weekly price action and RSI does not rule out a retest lower but it could also be a “distribution setup” before a dump and pump scenario
  • Further weakness will only exacerbate the diverging bullish RSI
  • Potential fractal at play with a target of 1150 – 1190 (this area can turn into potential reversal zone)

VIX Weekly

Gold to target 850 -950 levels at later stage?

Fundamental possibilities that could see further sell off:

  • TINA which favour equity (money flow out of ETF)
  • Market sentiment remain bearish in the yellow metal (further outflow of ETF holdings)
  • US gradual rate hike offer better return than safe haven assets
  • Over supply remain the issue
  • Producers could continue overproduction as the cost of production is achievable at around $ 800 per ounce
  • Weakness in commodities currencies persist

Technical possibilities and projection that could see 850-950 levels are:

  • Unless the yellow metal broke above $ 1260 levels the outlook remain bearish
  • Death cross stands as major barrier with weekly 100 ma and 200 ma acting as strong initial resistance
  • Potential fractal repeat of 14 and 15 peak and trough (end of year sell off in gold)
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