Gold Market Price Points to Watch

by: Simit Patel November 20, 2008 | about stocks: GLD / UUP    

Simit Patel

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

For those like myself who remain strongly bearish on the US dollar, gold is an appealing buy, and a key indicator of the dollar's health. With that in mind, let's look at a few charts to help us identify key price points that gold and currency traders should watch and base decisions off.

The chart below is a weekly chart of gold. Note the moving averages are bearish, and that the market has been consolidating for the past four weeks, albeit on relatively low trading volume.

Below is the daily chart. The trend is bearish here as well, as indicated by moving averages as well as a downward channel in the making. The daily chart also shows key support at 648, confirmed as both a previous key price point as well as a major 61.8% Fibonacci retracement level at that point as well.

For short-term traders, the 20 day exponential moving average has been serving as resistance, and is currently just below 750. Given the current bearish trend in gold, traders may want to consider shorting gold should the market break below the 50% Fibonacci level at 721 with a target of 647 and a stop-loss at 750.

Fundamentally, I am still bullish on gold given the factors pointing to a weak US dollar. With that in mind, I'm looking for gold buying opportunities. While I think gold is a great long-term buy at this price level, an even better opportunity would be if the market drops to 648 and bounces off it. Also worth noting is that Iran recently switched its reserves to gold, which I would view as a bullish sign for gold.

Related Articles

This article has 7 comments:

  •  
    Nov 20 05:46 AM
    Actully your view is right but my dear freind did you notice that COT at every friday which indicates some bullishness is still remain. See the deleraging process if you will calculate then you will find out at what point they will halt their positsion(Ref.my aricle DELEERAGING PROCESS TO END BET WEEN US$720-- TO US$690......i have already mention in my arcile (goolge search-Type-Rakesh Varasia)....i was bullish at US725 dollar for target of US$763 which already strike yesterday.... because i cant wait market to bearish since i am Analyst i want daillly volme .....



    Now i think market to bottom soon at US$684.......... so i have storng selling call at this level.........but dont forget above CHINAS SUDDEN CONVERSION of US$1.70 trilliion in to gold ...i think they will increase their reserve buying gold at this moment...................
    Reply | Link to Comment
  •  
    Nov 20 08:27 AM
    I cannot give technical support that much credence, not because it is not a valid tool, but because we are dealing with manipulated markets in gold and silver. Too many times I've seen the Crimex 10 o'clock dump after a healthy run in its price..
    Reply | Link to Comment
  •  
    Nov 20 08:30 AM
    I don't give technical analysis that much credence because the markets are not honest. Too many times I have seen the Crimex do a 10 o'clock in the morning dump.

    i78.servimg.com/u/f78/...
    Reply | Link to Comment
  •  
    Nov 20 11:52 AM
    The stink is not over yet. What will happen in the next couple of months will really smell. Comex, banks, wall st., are not done with the metal manipulations. Stear clear for the next couple of months and then get back in. To much money to be made with the manipulations, not enough investigations. Wait. The foreign people that just made all those big purchases, they will be taken down. Our manipulators are very good at what they do. Wait
    Reply | Link to Comment
  •  
    Nov 20 04:12 PM
    If our Congress would do their job & listen to the people Screaming for their help ,To stop this Madness by the Fed & its cohorts & line the SOBs up on Wall Street & do some good Old Time Country Justice,we would not waste any tax payers money,buy a roll of new rope,then make examples out these SOBs,this Shit would Stop & these Geeks would Think Real Hard,before they would Engage in the Gamling they have become use to! Where's John Wayne when we need him?
    Reply | Link to Comment
  •  
    Nov 20 06:36 PM
    At this stage it does not matter. China is buying it's own gold. Hold the price down and china buys more with less US dollars, bring the price up and everyone bails out of the dollar. Any which way, China wins, we fry!!!

    3400 tonnes x 2000 pds/tonne x 14 ounces/pds x 750 US/oz=71.4 billion Dollars. Thats a drop of water in their bucket of 1.4 trillion reserves.
    Reply | Link to Comment
  •  
    Nov 21 02:20 AM
    Very intelligent strategy. You have a thesis (dollar strength cannot last forever) yet you are not trying to be a hero as if buying gold at any price will help kill the manipulators, etc.

    Instead, you are indicating a short of gold is a potentially good move IFF the charts say so. That, sir, is called not fighting the ticker and I salute your intelligence.

    One day, maybe 12, may 18 months from now the tide will change for gold and then you will want to be completely out of the dollar. Until then just let the chart tell you what to do.
    Reply | Link to Comment
More Comments on GLD ยป
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Simit Patel

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Gold Price
Dollar/Currencies
Metal Miners
Precious Metals Funds