From the Gold Rush to the 10% Golden Crash next?
A few weeks ago, I mentioned that the gold rally had come to an end.
At the time, the price was at $1,970, and I expected the price to crash for the rest of the year.
Well, the crash came much sooner than even I expected.
Just last week, gold prices sank another 4%. And to put this into perspective.
We have not seen this kind of gold crash performance since June 2021.
In fact, on 25 September, the gold price dropped from $1,970 per ounce down to a low of $1,829.
If you missed the first down leg of gold, you’re not going to want to miss the next one.
Here’s why I expect the price to continue down.
Why the JOLTS report is great for America but bad for gold
Let’s start with what the JOLTS report is.
The Job Openings and Labor Turnover Survey (JOLTS) report is a monthly
publication by the U.S. Bureau of Labor Statistics (BLS).
It tells us important information about the U.S. labour market.
The report is typically released a few weeks after the closely watched m (Nonfarm Payrolls) and offers a different perspective on the job market.
August data of the US JOLTS Jobs Openings was recently released. And it crushed analysts’ expectations.
It showed the job openings improved to 9.61 million in August from the previous reading of 8.92 million.
When the report came out, the gold price dropped even further.
We need to remember….
The JOLTS report of 9.61 million in August suggests a strong labour market and a boost in economic optimism.
In a growing economy, we’ll see investors will look to riskier assets like stocks over safe-haven assets like gold.
And so, this led to a decrease in gold demand and a drop in its price.
Another interest rate hike is on the cards
Several Fed officials have suggested that America can expect at least one more 25 basis points rate hike by the end of the year.
This will be to try to bring inflation back to the 2% target.
Also, with the higher jobs openings and a stronger economy – this has put the US wage inflation and higher interest rates back on the agenda.
Here is what Jim Wyckoff, senior analyst at Kitco Metals, said in a Reuters note.
“There is a reckoning that interest rates are going to be higher for much longer, which has been the bearish element in the precious market.
Gold prices could go below $1,800 in the near-term,”
I don’t normally agree with the news and hype.
But the charts agree with the downside to come.
Why this massive inverse Cup and Handle is showing 10% for gold
You can see since April 2023, it’s been moving in a bearish (down) pattern known as an Inverse Cup and Handle.
Three parts make this Inverse C&H pattern including a.
Cup (big rounding top),
Handle (small rounding top) and a
Brim level (horizontal support).
Now that the price has broken below the brim level, means we should expect the price to continue down.
The first target I have for gold is to the next strong support (floor level) at $1,710.
This was the level that was tested in January, and it looks like the price will go back to that testing level again.
At the time, the price was at $1,970, and I expected the price to crash for the rest of the year.
Well, the crash came much sooner than even I expected.
Just last week, gold prices sank another 4%. And to put this into perspective.
We have not seen this kind of gold crash performance since June 2021.
In fact, on 25 September, the gold price dropped from $1,970 per ounce down to a low of $1,829.
If you missed the first down leg of gold, you’re not going to want to miss the next one.
Here’s why I expect the price to continue down.
Why the JOLTS report is great for America but bad for gold
Let’s start with what the JOLTS report is.
The Job Openings and Labor Turnover Survey (JOLTS) report is a monthly
publication by the U.S. Bureau of Labor Statistics (BLS).
It tells us important information about the U.S. labour market.
The report is typically released a few weeks after the closely watched m (Nonfarm Payrolls) and offers a different perspective on the job market.
August data of the US JOLTS Jobs Openings was recently released. And it crushed analysts’ expectations.
It showed the job openings improved to 9.61 million in August from the previous reading of 8.92 million.
When the report came out, the gold price dropped even further.
We need to remember….
The JOLTS report of 9.61 million in August suggests a strong labour market and a boost in economic optimism.
In a growing economy, we’ll see investors will look to riskier assets like stocks over safe-haven assets like gold.
And so, this led to a decrease in gold demand and a drop in its price.
Another interest rate hike is on the cards
Several Fed officials have suggested that America can expect at least one more 25 basis points rate hike by the end of the year.
This will be to try to bring inflation back to the 2% target.
Also, with the higher jobs openings and a stronger economy – this has put the US wage inflation and higher interest rates back on the agenda.
Here is what Jim Wyckoff, senior analyst at Kitco Metals, said in a Reuters note.
“There is a reckoning that interest rates are going to be higher for much longer, which has been the bearish element in the precious market.
Gold prices could go below $1,800 in the near-term,”
I don’t normally agree with the news and hype.
But the charts agree with the downside to come.
Why this massive inverse Cup and Handle is showing 10% for gold
You can see since April 2023, it’s been moving in a bearish (down) pattern known as an Inverse Cup and Handle.
Three parts make this Inverse C&H pattern including a.
Cup (big rounding top),
Handle (small rounding top) and a
Brim level (horizontal support).
Now that the price has broken below the brim level, means we should expect the price to continue down.
The first target I have for gold is to the next strong support (floor level) at $1,710.
This was the level that was tested in January, and it looks like the price will go back to that testing level again.
✅ Facebook:
facebook.com/groups/matitrader
🌐Website:
timonandmati.com
𝕏 (Formerly Twitter):
twitter.com/timonr
Trade Well,
Timon Rossolimos
Founder, MATI Trader
(Pro trader since 2003)
facebook.com/groups/matitrader
🌐Website:
timonandmati.com
𝕏 (Formerly Twitter):
twitter.com/timonr
Trade Well,
Timon Rossolimos
Founder, MATI Trader
(Pro trader since 2003)
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