GOLD GC COMEX
75% of the currently held gold has been produced since 1910, two-thirds since 1950.
South Africa has been the source of much of the world’s gold reserves and about 22% of the currently accounted for gold comes from South Africa.
In 2020, China was the world’s leading gold producer, followed in order by Australia, the USA, Canada and Ghana.
Consumption of the world’s produced gold is about 50% in jewellery, 40% in investment and 10% in industry.
The price of gold is determined by trading in the gold and derivatives market, but a procedure known as gold fixing in London, which began in September 1919, provides a daily benchmark price for the industry. The afternoon fixing was introduced in 1968 to determine the price when the US markets are open.
Gold, as a risk hedging tool in times of economic instability, is no longer as reliable. This is confirmed by a study in 2017, published by institutions managed by the World Bank.
In addition to the factors mentioned above, we can add the cost of gold production and the impact of the oil price.
The first slide of the Gold quote is represented by the Profile Cluster displaying the trading volume data for the day. Total data on the percentage outperformance of the buy and sell aggressors is shown in the lower bar chart.
The histogram on the left side of the chart shows data on the trading volume for the selected period and the delta of the overweight of the aggressors for buying and selling.
2000 dollars per troy ounce this spring is the most traded price.
Buyers have been holding that level for several weeks and already this week the price is trading a little below that level.
If you set the task to determine the further trend of this futures contract for the second week, it is worth considering the news and economic data. Also pay attention to the highlighted portions of the quote with the corresponding numbers 1-2-3.
Look closely and you will notice that these three sections are very similar.
Also at the beginning of the pattern there was a 1 or 2 day decline and then a flat for 4-5 days.
If you base your decision only on the technical analysis, or rather the graphical analysis – considering identical patterns and their summary results – it is almost impossible to get an accurate prediction.
But let’s look at these patterns using the information about the stock data, namely the volume of trades, the imbalance of aggressors.
In the first model the buyers and sellers imbalance was 1%.
The gold futures contract statistics show that an imbalance higher than 3% in a day has a significant effect on sending the price out of the flat state.
A suitable imbalance of 3% on the buyers side was 27.02.2023 – trading session reaching the price of 1815 then a 4 day rally began
The second pattern was controlled almost all the time by the sellers and the scenario was ready for execution, all plans were ruined by a sharp 3 day jump to 2080. This is nothing like the targeted removal of stops by the sellers, but it was rehabilitated on 05.05.2023 when the imbalance at the high reached 3% on the sellers’ side.
The third pattern does not have a specific overweight and this complicates the analysis, but you should always remember that the futures contracts, unlike the stocks, have expiration dates, which imply closing trades before the expiration day and opening positions already on the new contract.
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Author: Mikhail Lemah 2023