Gold to target $ 1150 – $1215 level first?
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)
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)