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We can assert the trend is down because of lower lows and lower highs. What can be seen, at this point, is a very small range, so far, following a small range in May that closed poorly. What we know for certain is that the downtrend has not yet changed, so lower prices can be expected. We may hold an opinion that gold will ultimately be considerably higher in value, but there is no confirmation that price has begun to rally.
JP Morgan was able to maneuver itself to the long side of the gold market while speculators (which by nature are long during the bull market) have been pushed to the short side. Does it mean that the gold price will move up right away? No, although it could. Timing a price move is not what COT is about. But with the largest holder of gold futures contract on the long side of the market things could seem less bearish as the picture that has been painted lately.
We want to remind readers that inflation and deflation are determined by the expansion of the monetary base, but of the money supply. The fact that the money supply is hardly growing anymore, given the fact that the velocity of money was at all time lows at the beginning of this year (the official chart has not been updated since) it is fair to accept that deflationary forces are at work and prevailing.
Even though the weekly gold price looks weak, one should not take anything for granted. The daily gold price chart is more interesting, and it may be the best barometer for what to expect, moving forward. You can see the difference in the price distance. Are we getting a market clue that sellers are running out of effort?
I mentioned in Thursday’s trade alert that we could expect a back-testing sell-off from that breakout, and that would be normal. But I did not expect to see anything more than a retest of the breakout line around $1,394. I certainly did not see a move all the way back into the ascending triangle. So this week will be an important week for gold because if this is a Left Translated Cycle, then Friday morning would certainly have marked the top of this Daily Cycle.
What to make of the current trend in the price of Gold?
In today’s shaky economic climate, investing in gold is one of the few reliable things you can do. However, it is vital to your wealth and profits that you monitor the price of gold carefully, to stay on top of new trends. By doing so, you will discover that, lately, the price of gold and silver have been going down while the value is going up. A strange phenomenon, but important to imporant the underlying drivers.
Why is the gold price going down while commentators and analysts say that the value of gold is rising? How can that be?
That is a great question, and a critical one to reply in an accurate way. The answer to that question is based on the monetary aspect of gold. The fundamental value of gold as a hedge against the destructive monetary policies of the central banks in the west. Meantime, traders and investors have decided to search for profits in the equity markets; they have been selling the metals lately. That explains the disconnect between gold as an investable commodity versus gold as a hedge against monetary destruction.
By following the articles we publish at GoldSilverWorlds.com you can follow this trend and stay up to date on the latest market developments. Through our many years of experience and research, but also our extended network of experts that are behind GoldSilverWorlds.com, we are able to provide a wealth of valuable information, Be sure to check out the current gold price and read our latest articles analyzing the gold price. They provide accurate and well researched insights.
Last update: May 2013