Gold – Stuck in the Doldrums?

Back in the days when sailing ships plied the trade routes across the Atlantic, sailors became aware of an equatorial region of the ocean that had long calm periods, interspersed with sudden squalls and light unpredictable winds. Ships could be stuck in these conditions for weeks on end, simply floating, and making no headway in any direction – just drifting.

These areas came to be known as “The Doldrums.” This expression has since become shorthand for a state, or period of, stagnation or depression. This is exactly where we find ourselves with gold at the moment.

Looking at gold’s monthly chart, to try to assess what is in store for gold next year.

As you can see, after a long fall from the highs of the late summers of 2011 and 2012 – gold fell steadily until 4) on the chart. It is at this point, in January 2016, that it started to pick up momentum reaching a high of $1,375 in July – before falling back again.

At 3) it bounced back and climbed once more reaching $1,326 in August and since then it has fallen to where we find ourselves now, at 2) on the chart.

If we look at this in more detail,below, we can see that the 100-day SMA, (simple moving average) the orange line, 1), is rising.

At 2), it can be seen that the 21-day EMA, (exponential moving average) the blue line, is rising at a lower rate, and has been since the beginning of 2017. This close-up chart shows, very clearly, that this 21-day EMA has been acting as support since the beginning of the year. The price has gone below this line for short periods but it has never closed there. This remains the case throughout 2017 and there is no current reason to predict that 2018 will be any different.

At 3), the 55-day SMA has steadied since it’s fall and has leveled – with a slight upturn. This provided resistance back in 2016 but could prove to give strong support throughout 2018 acting as a backup to the 21-day EMA.

The problem is that the 100-day SMA, at 1), will act as strong resistance for any progress upwards. If you think of this as a repelling magnet, along with the 21-day EMA, you can see that the price is stuck bouncing between these two levels at the moment. Until there is serious momentum up, or down, gold will just remain in this region of the price ocean.

At 4), the 14-day, positive directional indicator, green line, is sharply negative, and has been falling since September. Against this, the 14-day, negative directional indicator, red line, has almost matched it – mostly canceling any movement out. This is noticeable in the flattening effect of the 14-day ADX, blue line, which, although negative, is not as severe as it was at the beginning of the year.

At 5), two positive, green, pulses have fired, after a reversal in trend, shown by the maroon pulses since June. This shows a steady climb back into positive territory.

Finally, at 6), since indicating the reversal of the trend in January (shown by the red dot) after a gentle climb through to the summer, the waveform has been flat – but positive.

Our conclusion, from all of this, is simply that gold is being pushed and pulled in every direction, both fundamentally and technically. There is no one major influence on it right now, and because of this, it is remaining steadfastly between $1,300, and $1,250 being dictated by the moving average support and resistance levels.

Until a strong “electronic wind” blows it above or below these levels and moves it away from its torpor, it looks as though gold will be stuck in those doldrums for a while.

Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.