WAVES.GOLD – THE RISE N FALL OF INDUSTRIAL METALS

GOLD is back from 989 highs to recent 936 lows. We need more price confirmation to call the ongoing down leg on GOLD as the start of a larger intermediate leg down. At this stage the push down looks like a minor corrective that could push lower till 925. The challenge is whether it will break respective supports and head back to 900 or lower. The GOLD sustained high may not have really worked out for GOLD international prices, but they did work out on GOLD INDIA spot, which pushed to historical highs near INR 16,000.

We have tried to look at GOLD and DOW connection to explain why it may be too early to pull the plug on GOLD for a larger collapse and why GOLD may still have upside left as the GOLD – DOW performance cycle suggest. Sub 925 dollars, our Long GOLD – Short DOW pair is challenged. As a rule we follow a 10% stop on all pairs.

In this update we look at the GOLD connection with INDUSTRIAL metals to understand how stretched we are on GOLD, DOW and the economic cycle. Industrial metals are a proxy for the economic cycle as the prices of industrial metals are assumed to grow as the economic cycle pushes higher. Now the question is that has the economic cycle really started up, or are we still in the bottoming stage. Stories like jobless recovery and illusion about economic recovery could be real. However, these are still fundamental observations.

What is interesting to see is that industrial metals represented by DOW JONES industrial metals index have reached a 12 month performance cycle low against GOLD (SLIDE 1). This means that the best part of the industrial metals rally might be over and we may be really looking ahead for a drawdown on both industrial metals and equity (DOW). It also means that GOLD might still be in a corrective down till 925, where it may see some support and a potential reversal.

The move down on GOLD is accompanied by weak momentum. A break at RSI 40 would suggest that 925 is likely. SILVER, PLATINUM, COPPER and ALUMINIUM remains UP but TOPPING.

Enjoy the latest WAVES.GOLD

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WAVES.GOLD is a perspective product published on Tuesday and Thursday. The report highlights GOLD and other precious and base metals. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

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