ST Outlook Gold (1 November 2011)


I am back from my travels and recovering from the obligatory “airline flu” (the flight from Toronto to Rome is not really a whole lot of fun), and it is now time to look at Gold again. The price movement has been perfectly in line with our analysis, and so there is no change to my bearish forecast. The current analysis places a 40-day cycle peak on 12 October 2011, and expects a 20-day cycle peak to manifest now.

Could this be an early 80-day cycle peak?

Price is expected to make one final lurch upwards to form the forthcoming 80-day cycle peak, not much higher than current levels. However it is possible that the peak on Friday 28 October 2011 is that expected 80-day cycle peak, occurring early (only 55 days since the major peak on 6 September 2011). Under conditions of strong downward underlying trend we expect peaks to occur early, and 55 days would make this cycle about 20% short – not outside the realms of possibility, but for now I am sticking with the peak on Friday as a likely peak of the 20-day cycle. My last post about Gold mentioned how price seemed to be rising up the 20-week FLD. This flirtation with the 20-week FLD has continued over the past two weeks, with one fairly subtle and false FLD cross last week on 24 October 2011. I have mentioned in a previous ST Outlook that the angle at which price crosses an FLD is often an indication of its verity, and the angle on 24 October 2011 was not an encouraging 90 degree angle. However yesterday price again crossed below the 20-week FLD, and the angle was much more encouraging – a fairly clean 90 degree break.

Gold crosses the 20-week FLD

This break of the 20-week FLD confirms the peak on 6 September 2011 as being of at least 20-week magnitude. Given this information I am confident in calling the same peak a peak of the 18-month cycle, because there is no analysis solution that allows for that peak to be of 20-week magnitude without it also being a synchronous peak of at least the 18-month cycle.

How important was last Friday’s peak? Here are the FLD lines that would confirm the magnitude of that peak on 28 October 2011:

FLD levels for Gold

And here are the VTL lines that would confirm the magnitude of last Friday’s (28 October 2011) peak:

VTL levels for Gold

And so I am still bearish Gold over a timeframe of the next few months. I believe that we are going to see lower prices (despite my expectation of falling stock prices as well!)


About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.

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