E Gold Breaking Seasonal Model

Gold is breaking the seasonal model of establishing a December low. Prices were on the verge of collapsing below the cycle trendline in November, but political uncertainty and economic concerns arrested the decline and gold continued higher.

The overall price structure resembles a corrective rebound that could peak within the next week or two. The 50% retracement of the April/August decline in gold triggers around $1267.

The stock market remains volatile over fears that trade negotiations with China are breaking down.

OPEC and Russia agreed to cut a combined 1.2-million barrels per day starting in January. That put a floor under oil, but I don’t think prices will bottom until early 2019.

The December 19th Fed meeting will determine much. Will Powell continue his dovish tone? How many hikes are scheduled for 2019? Will there be significant changes to the Fed dot-plot? The next 2-weeks are critical.

GOLD WEEKLY 

For the last several years gold made its seasonal low in November/December. The pattern was primed for a 2018 repeat, but gold was unable to break the cycle trendline in November. Political uncertainty and weak stock prices prevented the November breakdown. Now we have to figure out what’s next.

The Overall Technical Assessment:

There was a clear downtrend from April to August. Gold lost $200 in 18-weeks. Since the August low, prices have been rebounding…nothing explosive, just a gradual stair-stepping higher; a technical correction. Prices are now entering resistance between the 50-week EMA and 50% retracement level ($1267). Corrective rebounds often terminate near the 50% retracement. Timing wise the April/August decline took 18-weeks. It’s possible this rebound employs a similar 18-week timeframe which corresponds with the December 19th Fed meeting.

In a nutshell, I think there is a pretty good chance gold tops within the next week or two. We are meeting the technical benchmarks in time and price for a rebound or corrective retracement. Gold would have to close above $1310 in December or January to invalidate the bearish setup and establish a new bull run.

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