Gold prices in oversold territory – us dollar in overbought – commodity trade mantra binary file editor


Neils Christensen – After Wednesday’s nearly 2% drop in gold prices, investors have a one-day reprieve as U.S. markets are closed for Thanksgiving, and according to some analysts, the outlook is mixed.

Among technical indicators, the gold market saw a fairly bearish signal on Wednesday as gold prices dropped below $1,200 an ounce and the 50-day moving average slipped below the 200-day moving average, forming what is called a death cross, a signal of continued downward momentum in the near-term.

Colin Cieszynski, chief market strategist at CMC Markets Canada, said that while momentum could favor lower gold prices in the near-term, he does see signs that the yellow metal is due for a bounce.

“When gold prices broke through $1,200 yesterday, it triggered a mass of automated selling and that has pushed the market into extremely oversold territory,” he said.

Cieszynski added that gold is now in the 50-62% retracement range from its December 2015 lows to its July highs, explaining that traditionally, this technical box is where most corrections are halted.

“The key will be $1,170. If gold prices can hold $1,170 then I think we could see the market bounce back. But if this price doesn’t hold then gold is in trouble,” he said.

Another positive Cieszynski highlighted for gold prices is the US dollar, which he said is in extremely overbought territory and due for a correction.

Sam Laughlin, precious metals trader at MKS Switzerland SA, said in a research note Thursday that he is also looking for gold prices to test support at $1,173 an ounce. However, he added that it will be difficult for gold prices to push past resistance now at $1,200 an ounce.

Chris Beauchamp, market analyst at IG Markets, said that he could see gold prices fall as low as $1,110 an ounce in the near-term; however, he also agreed that the market is severely oversold.

“With gold prices so heavily oversold some kind of rebound, if only as far as $1220, is still possible cool pictures of nature. If a rally does materialize, it could go as far as $1250 in the short-term,” he said. As uncertainty builds, is now the time to buy gold or gold stocks?

Rupert Hargreaves – Global political and economic uncertainty has increased significantly over the past 12 months. The rise of Donald Trump, right-wing political parties across Europe, Brexit, China’s continuing economic problems and Russia’s sabre-rattling have all added together to make the world a difficult place for investors to navigate.

However, holding physical gold has many drawbacks. Yes, the price of the metal may rise during periods of economic and political uncertainty, but during periods of relative calm, the price of gold tends to languish canadian dollar to usd. What’s more, owning physical gold can cost you money. Time to invest?

Owning gold mining stocks is an alternative to holding the physical product. Miners have two advantages over physical gold 1 trillion zimbabwe dollars to usd. For a start, they’re leveraged to the price of gold with production costs usually far below the market price. A small increase in the market price may translate into a substantial increase in profit for a miner usd bookstore hours. Also as companies, gold miners look to return profits to shareholders. So rather than paying to own physical gold, you can pocket a nice dividend with gold mining shares.

Having said all of the above, investing in gold miners is no different from investing in any other business; you need to do your due diligence before taking a position. Some gold miners are drowning in debt with high production costs and labour issues while others are cash rich, well run and extremely attractive investments. A top gold pick

Randgold Resources is one such company. The firm has grown over the past two decades from a tiddler to one of the world’s largest gold miners. It will only take on projects with a 20% internal rate of return based on a gold price of $1,000 per ounce rs to us dollar. This strict investment policy means the miner hasn’t commissioned expensive projects and has a cash-rich balance sheet.

At the beginning of November, it reported an 18% quarter on quarter increase in net cash generated by operations pushing the group’s cash balance to $361.1m. Randgold is forecast to record a rise in profitability of 50% in the current year and a further 33% next year name in binary. The shares trade at a forward P/E of 24 although they support a low dividend yield of 1%. Rising star

Centamin is trying to become the next Randgold. The company is having hit a record this year and being on track to produce 520,000-540,000 ounces of gold, up from the 439,072 ounces in 2015.

Centamin’s all-in sustaining cash cost for the period is expected to be in the range of $720-$750 per ounce down from $885 per ounce last year. At the end of the third quarter, the company had cash and liquid assets worth $417m pln usd exchange rate. Pre-tax profit for the first nine months of 2016 came in at $208m, up from last year’s $54m.

The City is forecasting earnings per share growth of 119% for the full-year and based on these estimates shares in the company currently trade at a forward P/E of 8 and support a more attractive dividend yield of 3%.

A recent study conducted by financial research firm DALBAR found that the average investor realised an annual return of only 3.7% a year over the past three decades, underperforming the wider market by around 5.3% annually thanks to poor investment decisions. A little perspective on the gold market

Most of gold’s downside is geared not to the financial decisions of millions of investors around the globe, as the mainstream media would have you believe, but rather to linear computer algorithms geared to the dollar index. The trading part of the software has been told to automatically place trades at certain correlated price levels and that is why we get these waterfall drops. The rocket launch trajectories to the upside come when the trading function is told to buy and cover the previous shorts.

In the chart above, we are showing the percentage change in the price of gold over the past year against the percentage change in the dollar index. Our purpose is to provide a little perspective as to what is really going on in the gold market and to belay the interpretation that something has gone fundamentally wrong with gold.

Algos cannot peer around the corner. There is no rational for their function other than what its programmers have fed into the governing equation decimal word problems grade 6. Thus, if the algo says sell gold when the dollar rises, it sells gold when the dollar rises. It doesn’t stop to think that the dollar is rising in a milieu of crashing currencies globally and the potential consequences. It doesn’t stop to consider that it will take months for the Trump administration to get a tangible, workable economic program through the Congress, and then months more for the program to have an effect on the overall economy gold price 2016. Such critical thinking is left to the rest of us who are not tethered to computer trading programs.

(Along those lines, we are reminded that the computerized polling prior to the election was also algo-based, and you see where that got those who believed the polls to be reliable. Surprise! We missed something! )

So it is that buying opportunities are created in the gold market (and betting opportunities for those who like to bet on elections). Some consider such opportunities a gift. As you can see by the top chart, there is a cadence to the market action – upsides are followed by downsides, downsides followed by upsides stock market futures charts. When you zoom back and look at the dollar index chart from afar, here is what it looks like:

As you can see, even in a world generally declining fiat money across the spectrum of currencies, the dollar is in a long-term downtrend and gold is in a long-term uptrend. The dollar appears to be enjoying a secular bear market rally and gold appears to be suffering a bull market correction. What that tells the longer-term gold owner about the today’s pricing in a nutshell is that gold might be a good buy at current prices. It’s all a matter of perspective… that and the courage to act on one’s convictions even in the prototypical euphoric period just following a presidential election.

One further point, and once again a matter of perspective, we should all remember that gold prices are still up over 12% on the year and silver prices are up over 18%. That should not get lost in the shuffle. Meanwhile, the Dow Jones Industrial Average, after all the hoopla of the last several days, is up by comparison only 9%.

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