Gold to Recover, New Bull Trend Into 2010?

Commodities / Gold and Silver 2010 Dec 28, 2009 - 11:24 AM

By: Merv_Burak

Holidays are here. Just the facts today.

LONG TERM - The P&F chart shown last week moved another two zero’s lower but has still not broken below the up trend line. At the present time the P&F still has another $30 to drop before it goes bearish.

As for the usual indicators, the gold price remains above its positive moving average line and the momentum indicator remains in its positive zone but below its negative sloping trigger line. The volume indicator has dropped somewhat but is still above its positive trigger line. On the long term the rating remains BULLISH.

INTERMEDIATE TERM

Things are somewhat shaky on the intermediate term. The gold price has dropped below its intermediate term moving average line but the line slope still remains in a slight upward direction. The momentum indicator remains in its positive zone but below its negative sloping trigger line. The momentum has turned around and moving higher and may just break above its trigger line shortly. The volume indicator has dropped below its intermediate term trigger line but the trigger remains sloping upwards. The short term moving average line has dropped below the intermediate term line as a confirmation of an intermediate term bear BUT the indicators are not yet negative enough to call the rating a bear. The intermediate term rating is considered NEUTRAL at this time and must make an extra move up or down to get a bull or bear rating.

SHORT TERM

Going strictly according to the indicators to understand where we are at this time we see that the price is below its negative moving average line. The momentum indicator remains in its negative zone but has moved above its trigger line with the trigger turning upwards. The daily volume activity remains low, it’s the holiday season. The short term rating remains BEARISH BUT is improving and could change any day.

As for the immediate direction of least resistance that looks more encouraging. The price closed on Thursday just above the very short term moving average line. The line itself is still pointing downward but is in the process of turning upwards and may get there with one more day of upside price move. The Stochastic Oscillator is still in the negative zone but has given us two very encouraging indications. First, it has been in its oversold zone and for the second time has moved above the oversold line and above its trigger line. More importantly is the positive divergence the SO has given us. This is an indication of internal strengthening and a precursor to a price advance. So, we should see some encouraging upside action ahead. Where it will end will depend upon the strength of any upside move.

SILVER

Silver continues to show more favorable strength than gold during recent days. The P&F chart shows a trend continuing in motion with projections now to the $24.50 and $32.50 levels. They seem somewhat high but that’s what the P&F chart gives us.

Although the market action seems to be better than for gold the various ratings are not that much better. The long term remains BULLISH while the intermediate term is NEUTRAL. On the short term things are a little stronger than for gold. The price has closed above its moving average line but the line slope is still slightly negative. The short term could be considered as NEUTRAL.

A more detailed gold and silver commentary will wait until after the holiday season.

PRECIOUS METAL STOCKS

The week’s action in gold and silver stocks was mostly positive even though gold itself had a negative week. Nothing in the stock action is yet at a point of being concerned for the possibility of a continued bull market. This is just a rest period with the stocks taking a breather before the next move.

MERV’S PRECIOUS METALS INDICES TABLE

Well, I think I'll call it another week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central