Gold - Ready to Spring Another Surprise
By GCRU Gold News on Thursday, December 29 2016, 02:15 - Permalink
Below is an update of a number of interesting data points related to the gold market. Whether “interesting” will become “meaningful” remains to be seen, as most of gold’s fundamental drivers aren’t yet bullishly aligned. One must keep in mind though that gold is very sensitive with respect to anticipating future developments in market liquidity and the reaction these will elicit from central banks. Often this involves very long lead times.
It looks like gold is close to staging a playable rally again early in the new year. Whether it will be durable or just a technical rebound is hard to say at the moment – that will have to be determined as it unfolds. If a rally does get underway in early 2017, one thing is definitely going to be different from previous years though: it will be the first time in the past four years that gold and gold stocks deliver a new year rally from a higher low (the 2014, 2015 and 2016 rallies all started from progressively lower lows).
That would represent further subtle confirmation that the market’s character has changed. Consider in this context that the first correction in a new bull market can retrace a significant percentage of the initial rally – in the worst case, up to 100%. Such significant early corrections usually have in common that they generate greater bearishness than was evident shortly before the initial rally phase, which seems to be the case with gold at this juncture.