Even though we are way out here on the upper Plains, we keep a pretty close eye on a number of markets because we realize many of them are interrelated and influence those markets that most affect us.
One of the favorites we watch is gold. Maybe it’s because we remember “there’s-gold-in-them-thar-hills” Black Hills gold rush days but, more than likely, it’s because gold is a key barometer for things like currencies, interest rates and other financial markets.
Lately, things haven’t looked so good for the goldbugs as June gold futures on the Comex division of the New York Mercantile Exchange have seen a sharp selloff in the last week. Prices closed weaker and nearer the session low Wednesday, when the key “outside markets” were mixed for gold. The U.S. dollar hovered around unchanged, crude oil was firmer and equities prices were mixed to weaker. These key outside markets are what intermarket analysis is all about – markets reacting to each other’s price moves. As veteran traders like us know, that’s always been the case.
As a result of recent price action, serious near-term chart damage has been inflicted on gold. Bears still have the slight overall near-term technical advantage. Bears’ next downside price objective is closing prices below solid technical support at the January low of $805.20. Gold bulls’ next upside price objective is to push and close prices above solid technical resistance at $940.
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From an intermarket analysis perspective provided by VantagePoint Intermarket Analysis Software, it appears there will be more near-term downside price pressure in June gold futures. The first thing I notice on the VantagePoint gold chart is the predicted medium-term moving average crossover – the predicted medium-term exponential moving average of typical prices two days ahead (blue line) is below the actual medium-term simple moving average of the close (black line). That is a near-term bearish signal.
Also note at the bottom of the daily chart for April gold futures that VantagePoint’s Predicted Neural Index (PIndex) is presently reading 0.00. That also suggests near-term downside price pressure for June gold. The PIndex is a proprietary indicator that compares today’s actual three-day moving average with a predicted three-day moving average to predict whether or not a three-day simple moving average of the typical price will be higher or lower two days in the future than it is today.
When the predicted simple three-day moving average value of typical prices is greater than today’s actual three-day moving average value, the Predicted Neural Index is 1.00, indicating the market is expected to move higher over the next two days. When the predicted simple three-day moving average value of typical prices is less than today’s actual three-day moving average value, the Predicted Neural Index is 0.00, indicating the market is expected to move lower over the next two days.
Recent price action suggests that any rush to gold has been put on hold for the time being.
