Gold, the FOMC and interest rates

Gold Daily Report ~ March 17 2015

Trend
Long Term ~ Bearish-Need a monthly close above 1800 to confirm the bull market final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Bearish– Need a monthly close above 1255-1272 to remove bearish trend.
Intermediate Term ~ Bearish– Need close above 120-122 in GOLD ETF GLD to turn trend up.
Short Term ~ bearish- Need a close above 1171 to return to NEUTRAL.

Initial Resistance 1163-1167 2nd tier 1171-1177
Support 1142-1148 2nd tier 1130-1135

The last update listed resistance at 1163-1167 and the high was 1164. Support was listed at 1142-1153 and the low was 1154.

The big event for this week is the FOMC meeting on Tuesday and Wednesday and of course all markets are focused on what the specific wording will be for the Feds and the factor in which all eyes are upon and that is the interest rate policy that will be forthcoming from this meeting.

During 2014 the trial balloon has been launched by the Feds that the lower interest rates that has been in effect for a Fibonacci 34 years is coming to an end and we are witnessing the transition that comes with this long term change.

There are those in the camp that the Fed will absolutely not raise rates and with those opinions we disagree.

If we look at things in a view from the moon, Paul Volker was the one who brought interest rates to 21% (the century high), Alan Greenspan was the one who brought rates back to the norm, Ben Bernanke was the one who brought rates to a 300 year low and Janet Yellen will be the one who brings them back up.

It is our view that the Fed has absolutely no control over long term rates and they are in essence trend followers. “Fed speak” has us thinking that they are in control but the fact of the matter is the global debt market is so big, and so deep in depth that the Fed follows long term trends. Yes, they can control short term rates and it certainly has some influence. That we are not denying. But overall they do not have control of long term rates and we believe that the cycle of rates has run its course and the future will be of longer term rates beginning its new cycle of higher rates.

To take it further, we actually think the Fed WANTS higher rates for a number of reasons, but that will be for another update.

As far as gold, all trends remain bearish in gold and odds favor (generally speaking) that gold will most likely bottom in 2015 (to 2017) and at the 875 price area ( with a max range of 680 to 1080).

As for the very short term, odds favor gold makes a low this week in the 1142-1146 area and a rebound into April 3rd will develop taking gold back up to the 1175-1208 area.

Gold Short term

Price reached the 1146-1148 area twice last week as we have been anticipating 1142-1146 as the area that would hold based on the 1146 lows established on Nov 13th and 30th of last year. With price at the bottom of the channel line, odds favor a low should develop this week that will take prices higher into the 1st week of April before a resumption of the downtrend continues.

Support is 1142-1146. All trends remain down at the moment. We do not feel that the 1130 low will hold if tested. Therefore the only place we see for a rebound on the short term is whether we hold 1142-1146.

Odds now favor we hold at 1142-1146 and that gold bottoms in line with the short term cycle due this week. From there we’ll look for a bounce into the 1st week of April.

Note - price does not include Tuesday session on chart.

Gold Cycles

The next cycle turn is March 20th (plus or minus 72 hours). That means that the “window” for a price low begins Tuesday March 17th and will most likely provide a low this week and as late as Friday. From there we’ll look for prices to bounce higher into the 1st week of April.



HUI GOLD STOCK INDEX
Intermediate Term Trend ~ Bearish
Intermediate Term Moving Averages – 175.59 – 180.33

We have reached the line on the HUI chart that has been penetrated three times but each time provided a low from which the HUI has bounced. With the cycle low due this week on a short term basis, its possible that the gold stocks hold here. However, that by far does not eliminate a test of the channel line at 140-144. With the FOMC meeting, the stock market may remain under some pressure into mid week and that leaves the potential for lower HUI prices. Any move to the 140-144 area would present a short term low opportunity and a rebound potential for April and into mid May. That is the bullish view and is by no means a guarantee. However, odds favor that the HUI should find a bottom here in the 3rd week of March and a rebound will be favored into April and then we’ll see.

All trends remain down at the moment and it takes a close above 180 to neutralize the downtrend.



NUGT
Intermediate Trend –Bearish
Moving Averages – 12.25 – 13.25

As long as NUGT is below the moving averages the intermediate term favors lower and we need a close above 14 in order to neutralize the current downtrend. Odds do favor we make a low this week and begin a bounce back up into the 1st week of April.

Support is the 7-8 area and resistance 13-15.



Gold Medium Term
Long Term Trend ~ Bearish since Oct 2013 @ 1361
Long term Moving averages 1401 – 1481
Medium Term Trend ~Bearish 1233 – 1247

One of the things we said when gold made its low in November of 2014 was that it did not favor (and still doesn’t favor) it being the final low. The reason we said that is because gold did not touch a trend line on the chart when the low was made and it is a very rare thing that a final bear market low would happen without touching a trend line. Not impossible, but very rare.

On the other hand we stated during the rally from November to January that the bull market in gold can ONLY resume if we take out the dual triple green channel lines and make it support. Price reached the middle line at the triple green trend line and then turned back down and has not looked back since. And that’s really the bottom line. In order for the gold market to resume its bullish form gold absolutely must make the triple green channel line a price support point and not resistance. In Addition the blue moving average has to cross above the red in order to confirm the trend change. Until that time, the downtrend remains intact.

Odds favor gold will make a new yearly low as Platinum has already done so. The next (and not the last) target will be the 1080-1100 area.




GOLD ETF GLD
Moving Average Trend ~ 113.80 – 114.78 – Bearish
Building up for one position, so it’s not a backing up the truck purchase.
This should be 1 stock position in your portfolio – NO MORE THAN THAT. BGT ¼ of a position at 153 on 3/7/13 and ¼ at 145 on 4/14/13 and ¼ at 131 on 4/16 and ¼ at 125 on 6/20

The intermediate term remains down. Resistance is 115-116 and then 120-121. It takes a close above 115 at the moving averages to neutralize the shorter term down trends. Odds favor GLD makes a low this week at the next lower trend line on the chart.




GDX
Intermediate term Trend 19.56 – 20.07 ~ Bearish

Resistance is the moving averages at 20.23-20.70 and short term support is the lower green at the 16.20-16.80 area.

It takes a close above the moving averages at 19.56-20.07 to neutralize the short term downtrend.



What next?

The short term trend is bearish but a price low in the 1142-1146 area between March 17th-20th is favored. Odds favor that low occurs during or right after the FOMC meeting this week.

Bottom Line

A short term low and bounce back to the 1st week of April should take place this week.