A Shift in Sentiment

Two weeks have passed since I last made an analysis of the gold chart, and it appears that I might again have been right. There's been support at about $1760, and anyone who've taken the opportunity to accumulate gold at this price have so far done all right. If my prediction holds, and this really is the right hand shoulder of an inverse head and shoulder pattern, visible in the weekly chart and centred around the odd looking cup and handle that appeared in March to April, best seen in the daily chart, then we're going to see a 20% rise in the gold price in the medium term. With support already strong, and multiple resistance levels to the down side, the odds are favourable to a long position in gold.

There's nothing further I can add to my previous predictions based on the gold chart alone as long as everything remains in line with my predictions. However, there appears to be a shift in sentiment when it comes to the gold vs. Bitcoin debate. Search interest for Bitcoin dropped below search interest for gold in June, and has remained there since. There's also been a drop in Bitcoin trading volumes. This weekend has seen some of the lowest trading volumes in more than six months. The retail traders are less active than they were just a few months ago.

Furthermore, the drop in interest for Bitcoin is not indicative of optimism towards risk assets. Search interest for Tesla has been trending lower. Speculative positions are not in vogue. However, gold is not enjoying any great interest either. But if this changes, which may well happen due to the drop in interest for Bitcoin, there will be additional support for the gold price, making it all the more likely that we'll end the year higher.

Rococo Cup with handle

By Vincennes Porcelain (France, circa 1739–1756), Francois Binet (France, active 1750-1775, born 1731) - Image: http://collections.lacma.org/sites/default/files/remote_images/piction/ma-31852871-O3.jpg Gallery: http://collections.lacma.org/node/229367 archive copy, Public Domain, Link