Gold-Will the bulls see yet another breakout failure?
Bullish narratives I've seen published online over the last couple of years:
1. Gold is a hedge against inflation
2. BRICS Currency-it will be backed by gold
3. China is hoarding gold
4. Central banks are gobbling up gold
Given all these narratives, one would think gold has some pretty strong tailwinds yet it has had 3 breakout failures since these narratives began. Will this 4th breakout we are currently experiencing be "THE ONE"? Or is this LT chart forming a possible distribution pattern around the $2K price point?
When I look at this chart in its simplest format...the inability to firmly breakout 3 times previously tells me the market has been selling into the strength vs. a true belief in its bullishness. Typically you want to see a chart "break, test and go"...this certainly did not happen.
This evenings strong move up due to "war news" is now just about to a key area of resistance...the non-horizontal trend line (blue dotted line).
Reality of golds usefulness: "More than 80% of the extracted gold is used to make jewelry, therefore the jewelry industry is by far the largest processing sector for gold.”
So in simplest macro terms: to be bullish on golds breakout, one should be very, very bullish on the male consumer buying up jewelry to be given to his companion or be very, very bullish on the female consumer buying or wanting gold jewelry.
Newsflash-Taylor Swift tickets & Sephora have eaten away at the female consumer over the last couple of years and gold jewelry is not something on the Christmas list right now! (just saying...)
So I'll go out on the limb and say the gap up this evening will end up being a sell the news sort of event and we will eventually see yet another breakout failure.
Can't wait to hear all the gold bugs tell me I'm an idiot...but honestly, I just don't get the allure of gold and why it's discussed so much in trading/markets. We don't go backwards in time, ever. IMO gold is no longer what it used to be in terms of it's market impact hence why these breakouts keep failing...instead it's now mostly just used to make beautiful jewelry.
1. Gold is a hedge against inflation
2. BRICS Currency-it will be backed by gold
3. China is hoarding gold
4. Central banks are gobbling up gold
Given all these narratives, one would think gold has some pretty strong tailwinds yet it has had 3 breakout failures since these narratives began. Will this 4th breakout we are currently experiencing be "THE ONE"? Or is this LT chart forming a possible distribution pattern around the $2K price point?
When I look at this chart in its simplest format...the inability to firmly breakout 3 times previously tells me the market has been selling into the strength vs. a true belief in its bullishness. Typically you want to see a chart "break, test and go"...this certainly did not happen.
This evenings strong move up due to "war news" is now just about to a key area of resistance...the non-horizontal trend line (blue dotted line).
Reality of golds usefulness: "More than 80% of the extracted gold is used to make jewelry, therefore the jewelry industry is by far the largest processing sector for gold.”
So in simplest macro terms: to be bullish on golds breakout, one should be very, very bullish on the male consumer buying up jewelry to be given to his companion or be very, very bullish on the female consumer buying or wanting gold jewelry.
Newsflash-Taylor Swift tickets & Sephora have eaten away at the female consumer over the last couple of years and gold jewelry is not something on the Christmas list right now! (just saying...)
So I'll go out on the limb and say the gap up this evening will end up being a sell the news sort of event and we will eventually see yet another breakout failure.
Can't wait to hear all the gold bugs tell me I'm an idiot...but honestly, I just don't get the allure of gold and why it's discussed so much in trading/markets. We don't go backwards in time, ever. IMO gold is no longer what it used to be in terms of it's market impact hence why these breakouts keep failing...instead it's now mostly just used to make beautiful jewelry.
Comment:
When writing this post last night...Gold was near the high. At that time, I didn't think we'd see a 5% swing in the opposite direction and close the day with such a bearish looking candle!!!
Comment:
Gold on the yearly closing is showing a non-horizontal breakout...to have been a double bullish breakout a yearly closing above 2089.2 (which was the 2020 intra-yearly high) really needed to have been met. Unfortunately the yearly closing fell a little shy at 2071.8; therefore a horizontal breakout has not yet occurred on the yearly. Bulls & bears need to watch gold closely...IMO it needs to continue to just go starting in 2024...no looking back! Time will tell but a weekly closing above 2152.3 would mean any bears should be looking to close out any short positions. The bearish reversal that occurred when gold hit 2152.3 was really strong and therefore if the bulls can get a closing above this number they will certainly be in control.
Comment:
Gold is on a mission...let's see if it can break above the ATH and stay there!