As the world turns, the price surge in gold appears to be a mystery to some puzzled traders, but savvies who have followed along here for at least a few precious hours are definitely not in the clueless camp. There is a lot to cover from the technical analysis side of the ledger, so let us first peruse the link garden and one interview that includes a few interesting surprises, then go for a deep dive into the charts.

A TaperCaper excerpt from today’s release of the FOMC Jan. 29-30 meeting minutes:

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.”

• Fed minutes: Slowdown worries prompt pause – Reuters, Feb. 20
• Some Central Banks Have Gold Fever, and It Might Be Sensible – NYT Dealbook, Feb. 5
• Italian Populists Target Huge Gold Reserves and Some Cry Foul – Bloomberg, Feb. 11

“Percentage change in gold reserves 2010-2019. Russia’s winning. China’s opaque. The world is starting to wake-up. The U.S. is sound asleep.” – Jim Rickards, Feb. 11

• Silver demand expected to make sharp rebound during calendar year 2019 – Coin World, Feb. 8
• Hong Kong launches a new micro gold trading platform called GoldZip,– SCMP, Feb. 8
• Salvini Proposes Seizing Italy’s Gold Reserves From Central Bank – Zerohedge, Feb. 11
• Largest gold shipment moves to Dublin amid Brexit concerns – Irish Examiner, Feb. 11
• Fed Warns Dollar “Might Not Retain Its Dominance Forever” – Zerohedge, Feb. 12
• Sub-Zero Bund Yields Are Back on Radar as Europe Fears Recession – Bloomberg, Feb. 13
• India gold imports jump 64% in Jan. despite prices at 5-year high – Business Standard, Feb. 13
• When trouble strikes, where should you hide? The case for gold – The Economist, Feb. 16
• The Untold Story Of Nixon And The $35 Gold Peg – Mark Lundeen, Feb. 17
• RBC’s Gero: ‘Gold Now Has A Life Of Its Own’ – Kitco, Feb. 19
• Greg Weldon on What’s Driving Gold & Where it’s Headed (Audio) – The Daily Gold, Feb. 19
• Bernstein Quants Join Bulls on Gold Sector as Cycle Darkens – Yahoo Finance, Feb. 19
• Hedge fund reaps huge returns in metals, doesn’t want your money – Mining.com, Feb. 19
• What Trump’s About To Do: Gold Backed Dollar – Portfolio Wealth Global, Feb. 15

Before moving on to today’s technical analysis, if you have not followed along since the end of 2018, here are the links:

• Poker Face Weather With Fibonacci and Gold – Jan. 24
• Silver’s Hi-Ho Day Needs a Few Dollars More – Part 2 – Jan. 26
• Live radio interview w/ Dave Janda’s Operation Freedom on “Fake News in Gold” – Feb. 3
• Gold Technical Analysis and the Doves Talk Negative Interest Rate Poker – Feb. 7
• Minding a Few Glory Holes in the Gold Mining Stocks – Feb. 10

Gold’s weekly chart was discussed during my Feb. 3 interview, and it highlights the 50/200 Simple Moving Average (SMA) Golden Cross. To view a larger version of any chart, right-click on it and choose your “view image” option.

 

“Gold Trolls and Armchair Analysts got their panties in a wad today. The chart still looks great. Breathe” – TraderStef on Twitter, Feb. 6

Gold weekly chart as of Feb 7…

“The pattern dominating the weekly is an Ascending Triangle. The Cup ‘n Handle that enveloped the Measured Move Up off the Aug. 2018 low and Ascending Scallop base is very clear on the weekly. The Ascending Scallop’s Throwback (handle) morphed into a Rectangle Top that lasted for 4 weeks, with a $22 price range before breaking out to a $1,326 high. Since the August low, there have been three sweet spot trading opportunities. The breakout from the Rectangle Top marked the third sweet spot. Resistance at $1,326 was due to a confluence of the 500 SMA and 78.6% Fibonacci level. The lower trendline of the Ascending Scallop’s advance and the $1,300 breakout are not violated thus far, so the third sweet spot technically remains in play. The DMI-ADX is holding its bullish Alligator Tongue pattern and all of the moving averages are lining up nicely for further price gains. The only near-term bearish indicator is the StochRSI’s overbought condition that looks long in the tooth, as well as falling volumes… Asia’s return to the market next week will likely determine where the chart is heading near-term, or a headline news item during Friday’s trading session may shove the price around beforehand. I remain bullish near-term unless the lower trendline that marks the Ascending Scallop’s rise is decisively breached to the downside. Not shown on that weekly chart is a Descending Broadening Wedge…  Downward breakouts are uncommon when they appear within an upward price trend. The odds of an upward breakout are 75%, and a breakout performs better when volume is trending downward throughout the pattern, as is currently the case.”

Gold daily chart as of Feb. 15, 2019, 9:20am EST…

Lawrence McDonald chimed in on the underlying reasons for gold’s recent surge in price. The TaperCaper and NIRP are huge indicators, as noted in my Feb. 7 article.

Gold daily chart as of Feb. 20, 2019…

Since the 50/200 Exponential Moving Average (EMA) Golden Cross at $1,290, the price has advanced $57 as of today’s $1,347 high and $47 since the third sweet spot heads-up was given near $1,300 on Jan. 25.

Following the Ascending Scallop’s Throwback (handle) that began as a Symmetrical Triangle and then morphed into a Rectangle Top, the $1,300 topside lateral was breached decisively and the price sprinted to a $1,326 high on Jan. 31. The lower trendline drawn back to Dec. 2018 and the 21 EMA provided support as each Fibonacci level was challenged and the price consolidated. The last Fibonacci retrace level at 78.6% near the $1,326 high marked the beginning of a Descending Broadening Wedge, which formed a base at $1,303 without violating the Rectangle Top’s topside lateral $1,300 breakout. The sweet spot remained in play throughout the pullback because it did not violate the $1,300 lateral. Another potential Ascending Scallop pattern has taken shape as the price launched to a $1,347 high today, where intermediate lateral resistance levels are obvious due to the choppy price action in early 2018. The next area of substantial resistance is $1,355, which marks a rimline of a reverse Cup ‘n Handle pattern drawn back to Jan. 2018

The Golden Cross is bringing all the moving averages and studies into bullish alignment. The second DMI-ADX Alligator Tongue is indicative of continued upside momentum, the StochRSI has tapped the overbought level today but can remain elevated short-term, and volumes are rising along with the price over the last few days, which pulled volumes back to an even keel that ended a downward trend that had been going since mid-November. Today’s closing candlestick printed a Northern Doji at the peak, which may or may not indicate that the price is primed to take a breather before attempting further gains into resistance territory.

I remain bullish near-term unless the 21 EMA or lower trendline is violated, and even then, the 50 EMA is not far off and would likely provide good support. The current price action may be setting up for another Throwback pattern before attempting further gains. If the price reaches the $1,355 to $1,365 range, the combination of candlesticks and volume characteristics will determine if gold attempts a break beyond $1,380 before the usual seasonal dynamic takes hold.

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UPDATE: GOLD DAILY CHART FEB. 22, 2019 CLOSE… shallow pull back as expected w/Doji at peak.  Chart remains bullish near-term.  Keeps eyes on 21 EMA, lower trendline, or a downside breach of 50 EMA for a heads-up for further downside potential.  Sweetspot off $1,300 remains in play.

 

The precious metal market sometimes comes across as a little insane.

“Insanity – a perfectly rational adjustment to an insane world.” – Albert Einstein

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