GOLD Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Price Extended

The gold bugs have enjoyed a big party over the last couple years. A gold run from 1160 to 1761 is nothing to sneeze out; a huge six hundo plus point rally, a +52% orgy of glory in only 24 months. Gold is rising over +2% per month for the last two years.

Alas, Gloomy Gus comes along and has to provide the somber news for gold bugs. If the US stock market is weak through the end of the year, which is highly likely, the general thinking is that gold will be higher. A flight to gold and Treasuries would occur as investors seek safe havens. However, the gold monthly chart is topping out so it will be headed for months of down as well. Perhaps a bit more of deflation fun is on tap which takes stocks lower and keeps gold in check.

Gold price is printing matching highs over the last 3 months. The RSI is negatively diverged as price prints the new and matching highs and also overbot; bearish signals. The rising wedge is bearish. The histogram is also neggie d, ditto the stochastics and the money flow which is the third indicator from the bottom of the chart. The second to the bottom is the Chalkin money flow and it shows long and strong juice still available. The MACD is long and strong wanting to see another higher high in gold on the monthly basis.

Price is running up the top band so a move to the middle band at 1467, and rising, is on the table as well as the lower band at 1157 and rising. That would be a round-trip going back to 1160-ish. Price is extended above the moving averages requiring a mean reversion. The Aroon red and green lines indicate that gold price is extended right now.

Gold price is matching the highs from Fall 2012. The indicators are sideways or show strength for that 8-year time frame. This will help the MACD and Chalkin lift gold price for another month.

If you bring up the gold weekly chart, it is in negative divergence and looking sick; a rolling top. The MACD line prints a high as price was still trying to sneak out a matching high so it is a tough call but the door has to be left slightly ajar for price to come back up to 1750-1780. The weekly chart is clearly weak, however, with price at matching high levels for three months but the chart indicators negatively diverging. Gold will likely retreat with other commodities, probably on a rising dollar, perhaps for a few weeks, but then recover and come up for another matching or higher high either up to 1760, 1780, or if 1780 gives way, 1820, as per the long and strong MACD on the monthly chart.

The chart needs a jog move, down one month, then up the next month, to place the top when the MACD goes neggie d. June is underway and the candlestick is in progress. Interestingly, price made a matching high this month so if gold should drop for the rest of the month and drag that MACD line lower into a neggie d position, that may be good enough to call the long-term top in gold top this month. Thus, gold would be expected to top out, on a long-term basis (multi-months and perhaps a year or few), during June or July, early August at the latest. Plan accordingly.

One strategy is to scale out of your long gold position over the next 8 weeks you could sell a third of it now, then the next third in 4 weeks and the final third 4 weeks after that. In general, it would be prudent to stay away from gold on the long side in the near-term. Gold can be played short for the remainder of the year say from August on.

Every money manager and his brother are predicting non-stop upside for gold ahead. That is another red flag that is raised. If holding gold long, you would rather have the analyst idiots all predicting doom and gloom for gold. All these people thinking they are hiding in gold as a safe place are only covering their ugly backsides with a fig leaf. Over the next couple months, that fig leaf will be ripped off, and it will be an ugly site to see.

As an aside, on that weekly chart, if gold comes up to 1750+, check the indicators, if the MACD is neggie d, which is likely, it would be a short play from the 1750+ in the near-term since you could scalp off some points as it drops from there, on the weekly basis. Stated simply for the yellow metal going forward, gold is at the top of the mountain over the next month or two, and then it will likely trade lower for the following months into next year and perhaps beyond. 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 Added Saturday, 6/20/20: Gold finishes the week up +0.9% to 1753 flat on the month overall. So gold is up to 1750+ making a matching or higher high in price so now the indicators can be checked to see if negative divergence is appearing and it is for all indicators. Money flow is trying to show some strength to try and keep things afloat for a few more days but the weekly chart is likely going to roll over right now. Interestingly, gold price has been bumping its head against this 1750-ish resistance for 3 solid months! Typically, an ascending triangle may form which is bullish, and you can draw that pattern to the chart if you are creative, but it is more of a sideways move of gold price through the 1680-1750 channel for 3 months. It looks like gold wants to trend lower for the weeks ahead due to the neggie d but the goofy non-stop financial, political and government news flow maintains a buoyancy to price. The expectation is for gold to drop for several weeks ahead. Then price will try to recover, and will, although probably in a limited fashion, and then a roll over occurs and gold would be expected to trend sideways to sideways lower into next year. She should top out on a long-term basis probably during July-August although price may not have the oomph to make it back up to 1750-ish after the several-week slide that is about to begin. Of course, a major negative news event can change the picture quickly.