Gold Price Review

Reviews on spot gold prices, gold stocks & futures, related news and Technical analysis.

Location: Hong Kong

Wednesday, May 31, 2006

Short term Gold trading range $635 - $670

Gold has been trading within this range for a week. It has settled down after 2 weeks of sell-off which resulted in gold price falling from $730 to $635, a correction of as much as $100.

Yesterday the resignation of US Treasury Secretary John Snow has brought a surprise to the US stock market. He used to be a supporter of strong dollar policy. His left may reveal that the already weak USD will turns weaker in the future. Actually this is a good signal for other forex and Gold in the long run, but in the short term Gold needs time for correction.

$635 is a the price for a minimum correction for gold. For even more correction, it is possible that gold will drop to below $600 before another surge has started again.

Wednesday, May 24, 2006

Gold rebound to $670 and fell again

Gold is now trading at $642, dropped $30 from day high $672 in 6 hours.

Spot gold started correction 2 weeks ago, dropped for nearly $100 and tested $635 until it got an initial support. It formed a small rebound and continued to drop again today during US morning session. The supporting line was expected to be around $635. The previous trading range had been $620 - $635 which should show a strong support.

Investors had been too optimistic toward gold price in the past months. According to the "contrary theory", market would often go against the common expectations of the crowd. In the long term I believe gold is still in the uptrend. now gold should be in 2nd phase of the bull run, just the rise last month has been too fast that a long and large correction is necessary for further rise in the future.

Monday, May 22, 2006

Spot gold dropped further and test $635

Last Friday was a poor day for commodity gold. Price dropped from $680 to $655. The new week comes with a further drop, and it continued to drop during Asia market session, lossing another $18 to day low around $637.

Gold showed a slight rebound to above $650 during US morning session. According to HKEJ, the recent surge of Gold started from $560 and reach $730 in 2 months' time. For a 50% correction, gold should reach $645 which is the current level. A 61.8% correction should reach $625. This is still in a healthy correction range, yet the correction often comes in a fast and unexpected manner.

Friday, May 19, 2006

$680 support missed, Gold drops another $25 to $655

Spot gold has missed initial support at $675, and started a rapid drop as big as $25 to $655.

Gold has started a short term burst since 24 April after it broke the trading range $620 - $635. (see my previous post) The price was like a sky rocket and kept rising until it broke $700 and made the 25 years record high of $730.

Now a big correction finally started, and it has dropped about $75 which was about -10%. The basic supporting factors has never changed, but at this high price it was not the real demand that drive gold price up. A big portion of the gold inventory was bought by investors and funds. And since gold market (as well as commodity market) is relatively small compared to the world stock market. Any bigger profit-taking action can bring a shock to gold price.

The long term trend is always positive. But in short term the fluctations is unpredictable. I believe if gold missed $650, it should show a strong support at around $635.

Wednesday, May 17, 2006

Gold new trading range $680 - $715

Gold surged from $685 to $715, up $30 during Asian session, and back down to $685 after a stronger-than-expected rise in US consumer price report reignites worries about rates. Dollars rebounded again and EUR, GBP vs USD dropped more than 1% during US morning session.

Gold sees resistance at $720 and sees support at $680, now struggling within this range.

Tuesday, May 16, 2006

Gold shows initial support at $675

Gold price dropped from its 25 years record high from USD $730 to $675 in a few days, the correction has been $55 or 7.5%.

Spot gold starts to show support at $675, at which it was the last top before Gold broke and surge to above $700. Now it is trading at $685 in the US morning session.

If it does not drop below $675 support, further drop seemly unlikely. Otherwise it may test for support at $630 which was the lower bound of the previous trading range.

Monday, May 15, 2006

Gold big correction on dollar rebound

World market dropped significantly today following the decline of DOW last Friday. Dollar rebounded after a serious oversold. Gold reacted immediately and dropped $30 to $690, breaking the $700 support without struggle.

EUR/USD dropped from 1.293 to 1.283. Gold initiated a correction after a sky-rocket uptrend. The price surged so fast and so is the decline today. However, while the dollar downtrend is unchanged, Gold is still in its bull run.

Friday, May 12, 2006

DOW drops, dollar weak, Gold uptrend continues

Gold surge continues today, but fails to test $730 and now retreats $13 to $717.
In the long term the uptrend will continue. However, a short term correction is likely to happen when dollar rebounds after currency settlement by the end of this week.

Some facts about Gold:

- According to WGC (world gold council), in 2005 Q4, demand for Gold has risen to record high of USD $536B.
- During this period, Gold Investment has increased by 26%
- Gold and silver EFTs initiate more investors to take part in it.
- Traditional funds used to include very few gold or commodities in their constituent. They are now getting more involved into buying them as part of the fund constituent.
- Central government are actively increasing their Gold inventory, including China and Japan.

Thursday, May 11, 2006

Gold gone mad - day high $725 before retreat

Gold rules by weak dollars!

Spot good price stands firm above USD$700 for 3 days and even keep rising. Today it rocks again by $15 to $725, makes another 25 years record high and then retreats immediately. Now trading at $715.

US dollar fails to turn stronger despite Fed raise rate again to 5% yesterday. Investors lost trust on dollars and manage to keep less USD investment properties. This situation is unlikely to change in the near future. EUR / USD raises to 1.2816 in the US morning session. Whereas EUR will raise rate soon, investors tend to buy in more EUR or other non-US investment properties.

Short term goal of Gold maybe $750 before a significant correction starts. However, bear in mind, never try to guess the top and shortsell. Always be a trend follower.

Tuesday, May 09, 2006

Spot Gold price - first attempt to break USD $700

Gold price climbed nearly $20 in 4 hours to $698, attempt to test the $700 line.

The downtrend of USD is also significant. The short rebound yesterday didn't last long and resume the downside today. EUR / USD is trading at 1.275, which is expected to reach 1.3 in a short while.

Whereas the uptrend of gold is also clear, spot gold refused to drop last year when dollars rises. It broke the rule of thumb that Gold and dollar are always running in opposite sides, aided by the real strong demand for Gold. When dollars turns weak, the uptrend of gold grows more vigorously, neglect the fact that it is seriously overbought.

Monday, May 08, 2006

Spot gold correction starts after making another record high

The day high is USD $685, then gold starts a slight correction along with all other commodities: copper, platinum, sugar all drop slightly, except crude oil has a bigger decline due to news "Iran said it sent a letter to President Bush offering what it said were new ways to resolve the standoff over its nuclear program" help ease trader's worry to oil supply. oil sank $1.29 to $68.90 in the US morning session.

Recently gold is most sensitive to USD. Dollars rebounds after a serious oversold, and gold reacts quickly. Gold dropped $9 from its high to $676. Correction is very slight compared to its recent level of rise. USD is obviously still in the beginning of its downtrend. EUR will hopefully reach 1.3 in a short while. Gold would probably have broken $700 at that moment.

While some people said Gold is very expensive now, the history highest price is $850 in 1980. Taken the inflation factor, gold should weight over USD$2000 in 2006. Also compared with other commodities, it is the most valuable metal with most supporting reason for its sky-high price.

Thursday, May 04, 2006

Gold say no to correction... price reaching $700

Gold refused to correct and continues to test new high, price has reached another record high of $680 during US market morning session yesterday.

The latest CMX gold price is now trading at $677.33. For the recent 3 days, the lowest spot gold price was $660, and rebounded quickly once touched this point. $660 gives an initial support already, looks like the uptrend will continue.

Talking about the demand of gold, the demand from India, China and US already takes more than 40% of the annual inventory of Gold. However this is not enough to push the price of gold to the current level as high as $670. The only reason is investors buy in a lot of gold futures, and since Gold EFT was taken into effect, the situation was even worse. Looks like $700 is not a problem, but investors pls beware of the high risk.

Wednesday, May 03, 2006

Gold price into correction after breaking new high $675

Gold price enjoys a good uptrend for 2 days, which has risen another $20 in 2 days' time to a 25 years record high of $675.

According to survey from the United States Geological Survey in 2004, Global inventory of Gold and Platinum would be used up very soon. Gold will be exhausted after 17 years whereas Platinum exhausted after 14 years.

Giving this fact of the evering increasing demand for Gold from China and India in the recent decades, and people tends loss confidence in dollars and turns to buy Gold. The prolonged uptrend of spot gold is expected.

But the fact might be that most gold inventory are kept by investors. The supply will never change but as demand keeps growing, they are able to control the gold price to whatever level they wish. How high gold price can reach is only depends on how much they wish to earn.

Monday, May 01, 2006

Gold becomes unstoppable, heading to $700

Gold closed at $651.6 last Friday, with a good start today in monday and climbs to as high as $661. Now struggling in the range of $655-$660 for correction.

Gold looks unstoppable, technically it is going smoothly along the uptrend supported by the 10MA at around $630. RSI has been seriously overbought. But it manages to stay in the high place for a long time correction.

The recent burst in gold price was initiated by dollars turning weak. Technically USD was oversold and a rebound should be coming soon. This would give pressure to other currencies as well as gold. But be reminded that don't try to short-sell gold. It was against the trend and history tells us gold price could go up extensively regardless of how seriously overbought the TA shows.