20 years of Gold

7 nov. 2019

Looking at the macro perspective of Gold here. On the weekly chart, we can see the market structure that has been formed over the past 20 years. With an almost parabolic move from 2009-2012 Gold became seemingly overbought at a price of 1900 USD. Subsequently, a corrective wave took place for the next four years until the beginning of 2016 marking a drawdown of ~45%. Acting almost like a textbook retracement, the price stabilized around the .618 Fib and validated the uptrend started in 2006. The price then fought with the ~$1350 resistance for about 3 years before finally breaking through around Jun 2019. This brings us to today where people are saying gold is flash crashing because we are down ~3.4% for the week. All I can say is look at the bigger picture. Given the growing likelihood of a global recession and an exodus from risk assets, make me think gold still has plenty of room left to grow. Given the 15%-20% rally we have seen over the past few months, I would remain moderately defensive at these prices. However, I would be a confident buyer at a retest of the $1350 resistance to flip it to support.

Notes*
- The upper trend line creating the massive pennant has been drawn prematurely and should not be considered resistance, given that there is not enough data to support this.