(Originally published on December 4, 2016 at goldtradingmastery.wordpress.com)
This is going to be a short Saturday post because it has been a very boring week.
The only thing interesting that happened is that OPEC reached a deal to cut oil production. This should raise gold prices in the long run, but because the oil/gold ratio is currently very high (26 barrels per ounce, as compared to an average of 14-17), this will take a long time to have an effect on gold.
I will have more to say about the relationship between oil and gold later on in the week. But for now, here is an update on the markets.
As shown in the MACD and RSI, the dollar continues to be overbought in terms of its gold value. However, one piece of good news is that MACD is finally starting to flatten out. It may be that a crossover will occur soon.
But it is probably too late to buy the dollar now. Open interest on Comex gold fell this past week all the way down to a little over 400,000 contracts from a previous 600,000 in July, and gold net-long positions among speculators have fallen back to where they were at the beginning of the year. This means that the dollar is extremely overbought and likely to go into a bear market soon (or gold is oversold and headed into a bull market, if you want to look at it that way).
If you’ve been holding onto gold, waiting for a chance to sell a little in order to buy it back later at a lower price, the chance has probably passed you by.
If you’ve been holding onto cash waiting for a chance to buy gold, however, your chance of getting it at rock bottom prices is probably going to come soon.
Bonds continue to trade sideways. RSI is at 50. MACD is at -0.001. Boring!
The SPDR S & P 500 ETF is close to its 10-day exponential moving average. In addition, MACD looks like it might have a crossover soon. If this happens, and RSI falls below 70, it will be time to start looking at possible opportunities to buy.
Watch out for rising interest-rates though. The 30-year Treasury yield has just gone above 3.06. If it rises much further, the stock market party might be over.
So here’s an interesting chart.
This oil-backed ETF has been in a firm uptrend since the middle of November. For reasons that I will explain later on in the week, I expect the gold-price of oil to go up over the next year or two or possibly even longer. So this is something to keep an eye on.