Sunday, November 22, 2015

Gold COT (Commitments of Traders) and Weekly Chart Oversold Positive Divergence

Gold is at six-year lows. The COT information typically lags by a few days but note the consistent agreement between the COT chart and the candlestick chart over the last year. The green lines show gold rallies and red lines show the selloffs. The green circles are bottoms. The COT bars have pulled in tight towards the center line again so gold price should be basing in the days and week or two ahead. This agrees with the positive divergence shown on the weekly candlestick chart.

The RSI has a smidge of downside juice available over the coming days or week or two. The MACD cross is negative and bearish for price as well; gold bulls will need the cross to turn positive to prove a sustainable rally is ahead. The gold daily chart is setting up with positive divergence and agreeable to a relief rally at least a sideways to sideways higher move. Over the coming weeks, say as the year draws to a close, gold price would be expected to recover. This hints that the US dollar index will likely retreat from the 100-ish level. This creates an interesting dynamic into year end since the ECB plans to provide more QE on 12/3/15 only 10 days away and the euro should weaken and US dollar strengthen. If the dollar stabilizes and drifts lower in concert with gold rising, the additional ECB QE may be priced into the market.

The Federal Reserve is expected to raise rates for the first time in one decade on 12/16/15. Gold may recover in the near-term but then receive a spankdown again when the Fed hikes since the dollar may move higher, however, that move may be similar to the August to September jog move off the bottom with gold bouncing for three weeks, then retreating for 3 or 4 weeks, then rallying about seven weeks. Gold would be expected to stabilize going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

NOTE: The gold COT chart is courtesy of COT Price charts, a very useful site to monitor commodity and other Commitments of Futures Traders charts. The chart is annotated by Keystone.

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