I received a comment on gold last week that brings up a point that might be useful to clarify. The comment I received dealt with next message from the Fed, discussion of government policy another market impactful events (And he was very likely spot on in his analysis).
However, you'll almost never see me talking about fundamentals in these forecasts as they are traditionally considered, because I don't believe they are nearly as impactful as the ultimate ROOT fundamental in the markets... supply and demand forces.
In addition, I have over 20 years of experience trading the markets actively, and from all of those iterations a very clear pattern emerges... When you have an accurate and consistent analysis or forecasting methodology, its indications will align closely with the geopolitical, fundamental, and other market forces at critical turning points in price.
This saves a lot of time and effort doing your analysis, because you no longer must go deep into the geopolitical relationships, personalities and vision of a company's leadership, handicapping FDA approval of a new medical therapy etc. All these things are very imprecise and subjective, which reduces consistency and accuracy overtime.
In these forecasts, I am ONLY measuring supply and demand pressures, coming from the 8 major market forces that drive prices…and then comparing them against measurements that were made over a consistent period of time in the past.
As mentioned before, this is the same concept used to forecast the path of a hurricane. You use radar or a chase plane to precisely locate the hurricane, then measure how far it is gone over a specific period of time. From this “track” of observations you can then make precise forecasts about what is likely to happen next period
Like forecasting a hurricane, no forecasting methodology or technology is perfect so there is a margin for error, but with good observation and data the accuracy rate is consistent and significant.
That being said, sometimes there just isn't enough quality in the data to make a confident forecast.
That's where we are in the gold market right now. Gold has gone through the forecasted correction as expected and is experiencing some stable support here near $165 per share.
This is good for the bullish argument, as each day that passes within this support zone erodes the bearish energy that much more. I suspect we will see one more push to the downside, and as that fails there will be an opportunity to put on some more long exposure in this market.
I'm firmly convinced that we will retest the highs, and break beyond at some point, so I will continue to monitor this market closely!