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Last week's trading saw gold forming its low in Tuesday's session, here doing so with the tag of the 1750.10 figure. From there, a slingshot to the upside was seen into later in the week, with the metal pushing up to a Friday peak of 1795.90 - before backing off the same into the daily/weekly close. However, for the week as a whole, gold managed to end marginally higher.
As mentioned last weekend, the last short-term rally came from the 10-day cycle in gold, which was noted as being in topping range. The rally phase of this component was favored to end up as a countertrend affair, which it was able to do - giving way to lower lows for the swing into last Tuesday. Here again is that 10-day wave:
Going further with the above, the most recent downward phase of the 10-day cycle has been the odds-on favorite to bottom the larger 20 and 34-day cycles, with the larger 34-day wave shown on the chart below:
Cycle Note:The previous 40-day cycle bottomed on day 37 (three days early), so it's possible this cycle (currently day 41) extends a few days to balance the series. Overall, I think the odds support a bottom in gold very soon.
The Gold Cycle has been forming interim cycle high/lows approximately every 40-trading days. More recently, those turning points tend to arrive as we enter a new month. When you put it all together, technically speaking, I think we are very close to a low. The question is, where will the price of gold go from there?
Predicting gold prices can be said to be both a science and an art. For example, analysis of gold supply and demand is scientific and completely objective whereas aspects of technical and sentiment analysis of the current gold market can be more of an art as it relies on the skills and perspective of the gold analyst.
For shorter-term predictions of gold prices, the price of gold in the coming weeks and perhaps few months, technical analysis of past and current gold prices, market trends, as well as current market sentiment can be more actionable predictors. Here, the fundamentals can still play a role but generally serve more as background details.
When forecasting what may happen to the price of gold longer term, there are many things to consider including economic trends, the impact of current and expected monetary policy, QE, debt monetization, and the aggregate impact on future currency valuation.
The price of gold is often negatively correlated to the stock markets. When the markets go down, gold prices usually go up. However, this is not always true. Sometimes the price of gold and stocks both go up and down in unison. Fundamental factors play an important role and need to be carefully analyzed. Historically, however, the price of gold is not tied to the fluctuations of stock and bonds. This is one of the chief reasons when one should have gold in their portfolio to protect the long-term value of your investments.
As gold is traditionally quoted in US dollars, the price of gold is negatively correlated to the strength of the USD. The weaker the US dollar, the cheaper it is to purchase gold. Therefore, if economic factors predict a strengthening of the US dollar then this will tend to drop the price of gold, and vice-versa. According to the statistics (since 1973), the long-term correlation between the U.S. dollar index and the gold prices is -0.6 so this link is quite strong.
The level of US interest rates is an important driver of future gold prices. When investing in gold, the investor is faced with the opportunity cost of gold - a non-interest bearing asset. The higher the US interest rate for holding US dollars or investing in Treasuries, the higher the opportunity cost of holding gold. It is more likely, therefore, that a rally in the price of gold will be forecasted the lower the US benchmark interest rate.
The last two gold bull cycles, culminating in peaks in 1980 and 2011, were both followed by a price correction and then a multi-year consolidating pattern. However, The highs of last year do not indicate a multi-year peak, as gold is still in a long-term bull trend...
Prospecting for gold has never been easier than with a handheld tool. Spend the afternoon searching for treasures in fields, parks, and even beaches. The lightweight, reasonably priced tool?available on eBay?features everything you need to search easily and even comes with headphones, so only the person searching knows where the gold might be.
A gold prospecting metal detector is different from a traditional model because it is designed to be sensitive to certain materials. Specifically, a metal detector with gold in the title is created to be sensitive to gold metals. These detectors will detect all types of metal, but not all metal detectors are sensitive enough to detect gold.
Gold detectors are usually sold with headphones to assist in the search. The headphones alert just the user to the possibility of metal. The metal detector can be used without the headphones, though. If the headphones are not connected to the unit, however, everyone around the person prospecting will be able to hear the alert beeps, so they could beat you to the treasure.
Most gold prospector detectors you can find on eBay are waterproof up to a certain point. Before using one in water, its important to check the instruction manual that came with the product. Usually, there is a knob on the handle of the detector. The product shouldnt be submerged in water that is deeper than the knob. If water is allowed to go above the knob, the product could suffer damage to its components and LCD display, if it applies.
Not all units are created with a LCD display. However, the tools that are connected with this screen provide knowledge the prospector needs when searching for metals. The LCD screen is backlit, so it is easy to read in dark or low-light conditions. Information that could be shown on the display includes the following: