Gold- Will it continue to Glitter? A View of Where is Gold headed globally.

 

Globallly gold  has been trading near the the 1630-1590 zones for the past few weeks.

This is way of the highs created last year near 1750 odd levels.

A look at the gold long term charts and we see it is interesting poised for  move on either side at this juncture.

 

Presented below are gold weekly charts,

Forex Gold Weekly charts

 here we see two interesting facets, one gold is trending downwards in a channel movement . This channel downward move has now sustained and continued for near 20 weeks now and Gold has failed to clear that channel on either side.

The lower band of the channel now stands at 1530 and the upper band near 1635 zones.

 

At the same time there are price point supports at 1535 zones too. There were multiple historic lows created near that space. Similarly 1635 happens to be a long term retracement levels.

Conculusion and trading plan: Look for pull back trades within this zones with stops and reversal above 1640 and below 1530. A pull back strategy in the channel has been working well for near 5 months now. Similarly a break out side this zone will give heavy earning potential too and also have implications on dollar value and equity markets

Dow Jones Worth In Gold- The real value of New highs

Dow jones closed near 14400 levels this Friday. If we go and look at long term Dow Jones charts it is now trading well above it 2008 and 2012 highs.

Strong US markets are one of the strongest indications of a good global recovery. In a way better than expected jobs data this Friday on US markets was also no surprise if we put these facts together.

Strong Bullish sentiments is also echoed from the fact that markets are now discounting European concerns, take for example recently volatility due to news emerging out from Italy.

 

While a strong bullish year for global markets is no doubts on the cards, this is a good time to take a skeptic look and do some valuation analysis for the markets over a long term. Presenting here some food for thought to you dear friends the long term charts of Dow Jones versus gold.

DOW JONES Versus GOLD-- Long term Cyclical Charts

The charts reveal a completely different data and point of view. Based on this we see that actual valuation when compared to gold, a global benchmark is way lower than previous top.

The pair ratio made a all-time high in 1999 near 42 levels and is now trading at about 8.

So what are the inferences from this chart for a long term investor. And also to judge where global markets may be headed.

 

·         Firstly the value is not what all meets the eye, market valuations from a real worth perspectives are way away from the top. So always referring to old levels from valuations point of view will mean the same thing.

·         Secondly,if we see the trend line levels of this charts. We are out there to test a long term top created a level of 8.87. If this is taken out we may be seeing a lot of money moving out of Bullion and ploughing back into equity markets.

·         The pair is also now about to test a descending trend line a move above that will confirm a breakout and a long term bullish markets in true sense.

·         The Ratio has created a bottom near 6.3 levels and this will be something worth to watch out for in coming months. A beak of that bottom can signify another correction cycle for the markets.