044/18 The Midas Touch Gold Model™ – Update 27th of May 2018

The Midas Touch Gold Model™ is back to neutral!

The Midas Touch Gold Model™ as of May 27th, 2018

The Midas Touch Gold Model™ as of May 27th, 2018

Due to gold´s bounce during the second half of last week our Midas Touch Gold Model™ is back to a neutral conclusion. Unfortunately this is now the third week in a row that our model is switching back and forth. This type of whipsaw action is part of the markets. And any trend-following approach is likely to suffer in such a market environment. But at least we called for a bounce last week.

Of course, the three new buy signals on the daily charts for gold in USD, in Indian rupee and in Chinese yuan brought the model back to its neutral conclusion. Besides that, there were no other significant changes. Only the inventory of the SPDR Gold ETF (GLD) has been shrinking again as 6.78t of gold left their vaults.

Over all, gold has held up well and did not crash after breaking below 1,300 USD. This extremely positive and probably shows gold´s underlying strength already. Prices closed the week back above 1,300 USD and did test the resistance (former support) around 1,305 USD.

Gold daily chart, Summer 2005

Gold daily chart, Summer 2005

My now preferred scenario over the next couple of weeks is a back and forth trading range around the slowly rising 200-MA (1,307 USD). That means gold could quietly continue its bounce towards around 1,320 USD over the next few weeks. Once this shallow bounce is done, I expect a last and final dip towards and maybe below 1,300 USD again. This could be the last chance to buy into a weak gold price. In the chart I have highlighted the price action from summer 2005, which could be a blueprint for the next couple of weeks…

The only real problem for gold is the fact, that a panic in the Euro is brewing. After failing to reach the upper trend line of its longterm downtrend channel, the European Union´s currency has been selling off quite sharply over the last weeks. There is still room down towards 1,14 – 1,15 USD. Should this happen gold might temporarily suffer. But we also have to add, that gold has held up extremely well and might be already quite emancipated from the price action in USD/EUR …

Summarized, the Midas Touch Gold Model™ is neutral again and calls for more sideways action. Personally I think one should now start to slowly but surely use any further weakness in gold and mining stocks to build up positions. We might have another six weeks before gold is going to start its next leg up…

By | 2018-05-28T00:33:52+00:00 May 28th, 2018|Tags: , , , |0 Comments

About the Author:

Florian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He writes a bi-weekly in-depth gold and silver analysis for one of Germany´s largest gold and silver retailer the „pro aurum“ group. As well he is publishing a bi-weekly comprehensive gold & bitcoin analysis for his numerous international readers. He is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the gold market.

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