Gold: Technical Analysis Points to January Trading Bottom
Here are three factors that gold investors should be aware of over the coming weeks.
2. The January Barometer
Each of the past three years have seen significant trading bottoms in or around January, and this year appears to be headed in that direction again. The Gold Bugs Index (INDEXNYSEGIS:HUI) is extremely oversold and trying to stabilize. The index is also near its 61.8 Fibonacci retracement of the summer-fall 2012 rally.
3. The US Dollar
The dollar is the wild card here. And as one of the best corollary indicators for the direction of gold, it bears watching. After rallying out of a nice rounded bottom in 2011 (which correlated with a topping pattern in gold), the dollar spent much of 2012 forming a head and shoulders pattern. A sustained break above 81 would foil the pattern and likely start a move higher for the dollar (bearish for gold). However, a break below the 78-79 neckline level, and gold will be in rally mode.
Other recent articles/notes of interest include Pragmatic Capitalism's Two Reasons to be Bullish on Gold, wherein Cullen Roche highlights David Rosenberg's 2013 bullish forecast. He points out that monetary expansion and stagnant gold mining production are at the heart of the bullish argument. Also see Minyanville's Gold Should Be Nearing a Major Bottom, wherein David Bannister points to a late December/early January trading bottom.
Trade safe, trade disciplined.
Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter