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Comex Gold Long Term Technical Update

By: Chintan Karnani

 -- Published: Sunday, 4 May 2014 | Print  | Disqus 

100 day moving average: $1283

200 day moving average: $1300.50

400 day moving average: $1434.40


·         The charts above shows the relationship between convergence and divergence between 100 day moving average (MA) and 200 day moving average MA) . In the past whenever 100day MA and 200 day MA has converged, the same has signified big moves for gold. The moves due to convergence between 100day MA and 200day MA has always been sustainable and a new direction has been formed.

·         Gold now has to trade over $1280-$1300 zone till end September to target $1434 and $1700.

·         A daily close below $1280 for seven consecutive days will result in another medium term bearish zone to $1230 and $1147.

·         Net open interest is not even near half of the all time high suggesting lack of investment demand.

·         Trading volumes have stabilized which is a positive for gold.

Fibonacci series in gold


·         50% retracement at $1360.90 ($798.20-$1923.60) is the  key resistance and gold needs to trade over $1390.90 for four consecutive days to start a bullish run.

·         23.60% retracement at $1063.80 ($798.20-$1923.60) is the key long term support and as long as gold trades over $1063.80, in the long term downside risk will be limited. In case gold is able to trade over $1063.80 in the next twelve months , I expect restarting of another big and parabolic bull run.

Gold in the short term


·         Momentum indicators are in a neutral zone. 14 day relative strength index at 40 suggests neutral zone.

·         Commodity channel index (CCI) is below zero suggesting a short term bearish phase. CCI has to over zero to restart a short term bullish direction.

·         The gold rally to $1392 started from $1230. Gold needs to fall below $1230 or break $1360 for another set of moves

·         The situation as under (a) Gold manages to trade over $1230, in the next three months, then it will rise to $1430 and $1600 (b) Gold has a daily close below $1230 for four consecutive days, then it will fall to $1147 and $1060


·         Interest rates: The direction of US interest rates and European interest rates will be the key. Any indications that it will be very difficult for Federal reserve to move away from zero interest rate policy will be hyper bullish for gold. I do not foresee European central bank to give an indication of moving away from quantitative easing.  Bank of England should raise interest rate guidance on the higher side anytime soon. (markets have already factored in a shift away to higher interest rates by the Federal reserve between November and December)

·         Geopolitical risk: Ukraine tensions if prolonged will be bullish for gold.

·         Demand: Either Indian gold custom duty will be cut this year or partial gold imports will be opened this year. This will result in higher official Indian gold demand also reduce Indian gold premiums. Asian gold demand should zoom in the last quarter of this year from October onwards. May to September is a cyclical period of reduced Asian demand unless gold prices crash.

·         Gold investment demand will be dependent on interest rate scenario.


We remain bullish in gold from a three year to five year investment period. However in the short term we prefer to be extra cautious while investing in gold. Gold prices have been heavily manipulated by Americans.


Chintan Karnani

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Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.

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 -- Published: Sunday, 4 May 2014 | E-Mail  | Print  | Source:

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