{"id":33268,"date":"2016-06-05T18:59:35","date_gmt":"2016-06-06T01:59:35","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=33268"},"modified":"2016-06-05T18:59:35","modified_gmt":"2016-06-06T01:59:35","slug":"market-sentiment-still-supporting-higher-gold-prices","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/06\/05\/market-sentiment-still-supporting-higher-gold-prices\/","title":{"rendered":"Market Sentiment Still Supporting Higher Gold Prices"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on February 22, 2016. <a href=\"http:\/\/seekingalpha.com\/article\/3915096-gold-still-room-run\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Sometimes the test of a change in sentiment is not in the pace of the new trend, but instead in the behavior after that trend first gets tested.<\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33274\" aria-describedby=\"caption-attachment-33274\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_GLD.png\" rel=\"attachment wp-att-33274\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_GLD.png\" alt=\"GLD&#039;s run-up from 6-year lows practically went parabolic before ending in a large gap down.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33274\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_GLD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_GLD-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33274\" class=\"wp-caption-text\">GLD&#8217;s run-up from 6-year lows practically went parabolic before ending in a large gap down.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<br \/>\n<figure id=\"attachment_33275\" aria-describedby=\"caption-attachment-33275\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_gold.png\" rel=\"attachment wp-att-33275\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_gold.png\" alt=\"This long-term view of the price of gold is a handy reminder of how good we gold bulls have had things since the lows of the early 2000s\" width=\"550\" height=\"365\" class=\"size-full wp-image-33275\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_gold.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_gold-300x199.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33275\" class=\"wp-caption-text\">This long-term view of the price of gold is a handy reminder of how good we gold bulls have had things since the lows of the early 2000s<\/figcaption><\/figure><br \/>\n<strong>Source: Ice Benchmark Administration, Gold Fixing Price 3:00 P.M. (London time) in London Bullion Market, based in U.S. Dollars [GOLDPMGBD228NLBM], <a href=\"https:\/\/research.stlouisfed.org\/fred2\/series\/GOLDPMGBD228NLBM\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>, February 21, 2016.<\/strong><br \/>\n<\/center><\/p>\n<p>Market sentiment is working in the background to support the move in GLD. {snip} The main principle is simple: if the Google Trend for &#8220;buy gold&#8221; makes a local peak concurrent with an extreme in the price of gold, then odds favor a reversal in direction. This rule applies whether gold has made an extreme move lower or an extreme move higher. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33272\" aria-describedby=\"caption-attachment-33272\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-weekly.png\" rel=\"attachment wp-att-33272\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-weekly.png\" alt=\"Interest in &quot;buy gold&quot; makes a minor peak during the last peak in the price of gold.\" width=\"550\" height=\"292\" class=\"size-full wp-image-33272\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-weekly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-weekly-300x159.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33272\" class=\"wp-caption-text\">Interest in &#8220;buy gold&#8221; makes a minor peak during the last peak in the price of gold.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"https:\/\/google.com\/trends\/explore#q=buy%20gold%2C%20sell%20gold&#038;date=1%2F2015%2014m&#038;cmpt=q&#038;tz=Etc%2FGMT%2B8\" target=\"_blank\">Google Trends<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p>I have also recently noticed that the timeframe of the view matters. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33279\" aria-describedby=\"caption-attachment-33279\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-monthly.png\" rel=\"attachment wp-att-33279\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-monthly.png\" alt=\"The monthly view of &quot;buy gold&quot; in Google Trends reveals that traders could have declared a bottom in gold in November. December&#039;s weekly spike would have then served as a confirmation.\" width=\"550\" height=\"293\" class=\"size-full wp-image-33279\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-monthly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoogleTrendsBuyGold-monthly-300x160.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33279\" class=\"wp-caption-text\">The monthly view of &#8220;buy gold&#8221; in Google Trends reveals that traders could have declared a bottom in gold in November. December&#8217;s weekly spike would have then served as a confirmation.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"https:\/\/google.com\/trends\/explore#q=%22buy%20gold%22%2C%20%22sell%20gold%22&#038;cmpt=q&#038;tz=Etc%2FGMT%2B8\" target=\"_blank\">Google Trends<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p>Some folks get twisted up trying to look for consistency over time in the way investors and traders assess their willingness to pay for gold. <a href=\"http:\/\/seekingalpha.com\/article\/1579972-i-am-sticking-with-gold-a-critique-of-the-golden-dilemma\" target=\"_blank\">I addressed this in my critique of the &#8220;Golden Dilemma<\/a>.&#8221; {snip}<\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33276\" aria-describedby=\"caption-attachment-33276\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_VIX.png\" rel=\"attachment wp-att-33276\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_VIX.png\" alt=\"The volatility index has struggled mightily to push past the intraday high of 2012 even as market fears have presumably skyrocketed.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33276\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33276\" class=\"wp-caption-text\">The volatility index has struggled mightily to push past the intraday high of 2012 even as market fears have presumably skyrocketed.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>I have lately closely watched the market&#8217;s expectations for rate hikes from the Federal Reserve. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33277\" aria-describedby=\"caption-attachment-33277\" style=\"width: 473px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_30DayFedFundsFutures.png\" rel=\"attachment wp-att-33277\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_30DayFedFundsFutures.png\" alt=\"The market&#039;s rate expectations have essentially collapsed in less than a month\" width=\"483\" height=\"310\" class=\"size-full wp-image-33277\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_30DayFedFundsFutures.png 483w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_30DayFedFundsFutures-300x193.png 300w\" sizes=\"auto, (max-width: 483px) 100vw, 483px\" \/><\/a><figcaption id=\"caption-attachment-33277\" class=\"wp-caption-text\">The market&#8217;s rate expectations have essentially collapsed in less than a month<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.cmegroup.com\/trading\/interest-rates\/countdown-to-fomc.html\" target=\"_blank\">CME Group Fedwatch<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Another interesting development is the gold to oil ratio. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33287\" aria-describedby=\"caption-attachment-33287\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoldVsOil.png\" rel=\"attachment wp-att-33287\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoldVsOil.png\" alt=\"Gold has soared in value relative to oil to an all-time high.\" width=\"550\" height=\"365\" class=\"size-full wp-image-33287\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoldVsOil.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_GoldVsOil-300x199.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33287\" class=\"wp-caption-text\">Gold has soared in value relative to oil to an all-time high.<\/figcaption><\/figure><br \/>\n<strong>Source: Ice Benchmark Administration, Gold Fixing Price 3:00 P.M. (London time) in London Bullion Market, based in U.S. Dollars [GOLDPMGBD228NLBM], <a href=\"https:\/\/research.stlouisfed.org\/fred2\/series\/GOLDPMGBD228NLBM\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>, February 21, 2016.<br \/>\nUS. Energy Information Administration, Crude Oil Prices: West Texas Intermediate (WTI) &#8211; Cushing, Oklahoma [DCOILWTICO], <a href=\"https:\/\/research.stlouisfed.org\/fred2\/series\/DCOILWTICO\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>, February 21, 2016.<\/strong><br \/>\n<\/center><\/p>\n<p>Traditionally, gold would be considered &#8220;over-valued&#8221; at such lofty levels versus oil. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33288\" aria-describedby=\"caption-attachment-33288\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_USO.png\" rel=\"attachment wp-att-33288\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_USO.png\" alt=\"United States Oil (USO) has fared a lot worse than GLD recently. USO has also yet to generate a convincing bounce off all=time lows.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33288\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_USO.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160219_USO-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33288\" class=\"wp-caption-text\">United States Oil (USO) has fared a lot worse than GLD recently. USO has also yet to generate a convincing bounce off all=time lows.<\/figcaption><\/figure><br \/>\nSource: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><br \/>\n<\/center><\/p>\n<p>Even if gold cannot help pull oil out of its funk, it may already be supporting other major commodities. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33289\" aria-describedby=\"caption-attachment-33289\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_IronOre_MBIOI62-Feb-22.png\" rel=\"attachment wp-att-33289\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_IronOre_MBIOI62-Feb-22.png\" alt=\"Iron ore has soared recently off major lows.\" width=\"550\" height=\"347\" class=\"size-full wp-image-33289\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_IronOre_MBIOI62-Feb-22.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/160221_IronOre_MBIOI62-Feb-22-300x189.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33289\" class=\"wp-caption-text\">Iron ore has soared recently off major lows.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.businessinsider.com.au\/iron-ore-jumped-over-11-last-week-2016-2\" target=\"_blank\">Business Insider Australia<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Like oil, the market dynamics for iron ore are much different than gold. <a href=\"http:\/\/seekingalpha.com\/article\/3686516-another-look-reinforcing-dynamics-iron-ore-industry\" target=\"_blank\">Iron ore has been trapped in a self-reinforcing spiral of over-supply<\/a>. {snip}<\/p>\n<p><em><strong>Click image for a larger view&#8230;<\/strong><\/em><br \/>\n<center><br \/>\n<figure id=\"attachment_33293\" aria-describedby=\"caption-attachment-33293\" style=\"width: 290px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/150221_PeriodicTableOfCommodityReturns.png\" rel=\"attachment wp-att-33293\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/150221_PeriodicTableOfCommodityReturns-300x220.png\" alt=\"Gold has not led commodity prices higher since 2011. Could 2016 finally break this losing streak?\" width=\"300\" height=\"220\" class=\"size-medium wp-image-33293\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/150221_PeriodicTableOfCommodityReturns-300x220.png 300w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/150221_PeriodicTableOfCommodityReturns-768x564.png 768w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/02\/150221_PeriodicTableOfCommodityReturns.png 773w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-33293\" class=\"wp-caption-text\">Gold has not led commodity prices higher since 2011. Could 2016 finally break this losing streak?<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.usfunds.com\/interactive\/the-periodic-table-of-commodity-returns-2015\/#peri\" target=\"_blank\">U.S. Global Investors<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Finally, from a technical level, GLD can fall all the way to $109 or $100 before I start to worry about another false breakout for GLD. {snip}<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: long GLD, long SVXY<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on February 22, 2016. <a href=\"http:\/\/seekingalpha.com\/article\/3915096-gold-still-room-run\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on February 22, 2016. Click here to read the entire piece.) Sometimes the test of a change in sentiment is not in the pace of the new trend, but instead in the behavior after that trend first gets tested. {snip} Source: FreeStockCharts.com &#8230; <a title=\"Market Sentiment Still Supporting Higher Gold Prices\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/06\/05\/market-sentiment-still-supporting-higher-gold-prices\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[199,377],"tags":[200,24,1164,676,536,538,303],"class_list":["post-33268","post","type-post","status-publish","format-standard","hentry","category-commodities","category-oil","tag-gld","tag-gold","tag-google-trends","tag-iron-ore","tag-oil-2","tag-uso","tag-vix"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Market Sentiment Still Supporting Higher Gold Prices - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/06\/05\/market-sentiment-still-supporting-higher-gold-prices\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Market Sentiment Still Supporting Higher Gold Prices - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on February 22, 2016. Click here to read the entire piece.) Sometimes the test of a change in sentiment is not in the pace of the new trend, but instead in the behavior after that trend first gets tested. {snip} Source: FreeStockCharts.com ... 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