Gold Jumps As Citi Says Gold Sell Off Over, Reiterates $2400 Target

Tyler Durden's picture

Wondering why gold has moved by over $20 in the last few minues? Wonder no more - according to a note just released by Citi analyst Tom Fitzpatrick, the gold correction "has run its course and a rally is now back on the cards." Granted it is not all smooth sailing - "Gold may drop to $1,550 before turning", but when the turn comes, Fitzpatrick sees it as going all the way up to $2,400. He has the following technical observations: "Only a weekly close below $1,535/oz means corrections may be deeper." The result can be seen on the chart below. Incidentally this is a 1:24 scale replica of what will happen once the Fed and ECB proceed with the only logical step which is doing what they do best. Unless, of course, the plan is to have a modest war in the middle east to distract everyone from the economy. Because we have never seen that movie before.

From Citi:

  • Held the 55 week moving average on a weekly close basis ($1,567)
  • Failed to post a weekly close below the Sept low ($1,534)
  • Remains in the bullish channel ($1,544 this week)
  • The correction down looks to be over as we stabilise at these support levels and a rally back up is on the cards
  • Resistance levels are at $1,802 followed by the trend high at $1,920.
  • Our long term target is $2,400.

  • Held the trend and 200 day moving average as support.
  • Positive momentum divergence reflects weakness in the move down here and warns of a turn back up
  • Held the low from Oct 2011 and has formed a double bottom within a triangle
  • A rally through 139k would open the way for a move to the double bottom target of 153k (20% higher)

  • The move down on the Gold / Bonds Ratio has been almost exactly the same as that seen in 2008
    • The 2008 correction down was 2.81 points on the ratio over 99 sessions
    • The 2011 correction down which hit a low on Dec 29th was 2.84 points over 93 sessions
  • We also have positive momentum divergence on the chart - similar to that seen in 2008 at the lows of the move down.
  • The trend resistance from the highs converges with the 200 day moving average (also like 2008) at 12.21 and a rally through there would be a decent bullish break.

  • Tested and so far held the support levels that provided the top of the range in 2010
  • Also held the 76.4% retracement of the last rally from Jan 2011 to the highs in Aug 2011 (0.1250)
  • The rising trend line also converges with these supports
  • The 2009 correction down was 30%. The move down seen from Aug 2011 was 28%

Overall:

  • Gold has held good supports in the $1,550 area
  • Gold is showing signs of strength against the DXY Index and the equally weighted basket of G10 currencies
  • Gold looks to now outperform both Bonds (T-Bond) and Stocks (Dow)
  • Unless and until we see a weekly close below $1,535, we believe the uptrend in Gold has resumed and a move to $2,400 throughout the course of this year is on the cards.

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GetZeeGold's picture

 

 

BIBB......Buy it back bitchez.

 

silver500's picture

Market goes down, Gold goes up...

Normal Service has resumed. (For now anyway)

strannick's picture

Great stat, since it is all about the bonds...

 

  • The move down on the Gold / Bonds Ratio has been almost exactly the same as that seen in 2008
    • The 2008 correction down was 2.81 points on the ratio over 99 sessions
    • The 2011 correction down which hit a low on Dec 29th was 2.84 points over 93 sessions
  • We also have positive momentum divergence on the chart - similar to that seen in 2008 at the lows of the move down.
  • The trend resistance from the highs converges with the 200 day moving average (also like 2008) at 12.21 and a rally through there would be a decent bullish break.
  • Popo's picture

    Wait. What?   We suddenly listen to Citi analysts, just because they say what we want to hear?

    I hate to be the bearer of bad tidings, and I'm quite sure I'll be junked into oblivion for this:  But there's a very obvious problem with this call:

    Oil.

    Today's moves in oil are going to *seriously* tie Bernanke's hands when it comes to more easing.

    I'm highly suspicious of Citi's call for higher gold on the backs of the biggest oil move in weeks.  What I read here is this:  Citi wants to sell into strength because their inflationary expectations (ie: expectations of Fed easing) are falling apart with the current spike in oil prices, and Europe's decision to boycott Iranian oil.

    Bernanke is probably going to have to wait until oil comes back into line with his sub $100 expectations before he can even think about another round of easing.   And that spells more trouble for gold.  

    So what does Citi do?  They trot out an analyst who tells the gold bugs exactly what they want to hear.   

     

    jmac2013's picture

    If one is to believe the goldbugs that the futures market is manipulated to keep PM prices lower, couldn't the cartel do the same to oil?  Keep QE going for banks and governments and flood the commodities markets with limitless naked short selling?

    flattrader's picture

    >>>couldn't the cartel do the same to oil?<<<

    Why would they when every J6P needs oil and hardly any of them want gold?

    Gold and oil are not fungible for purposes of this corollary.

    Try burning gold in your gas tank.

    Much more money to be made in letting oil rise and gold fall (within parameters)...for the moment.

    eureka's picture

    Unless you're tired of getting fucked by US FED RESERVE & EMPIRE.

    IF YOU WANT FREEDOM - wake up and fight - for Ron Paul 2012.

    The Republican Elite is trying to destroy Ron Paul> TO WIT:

    http://www.infowars.com/ron-pauls-iowa-finish-biggest-fraud-since-kenned...

    oddjob's picture

    Try burning gold in your gas tank.

    Naive view from the consumer. Now view from the producer. Trade your countries valuable resource for fiat or fiat33?

     

    TheGardener's picture

    Try dropping a good delivery bar (400 OZ) in your heating oil storage tank. Warm feeling, but kind of hard to retrieve and convert.Then again you might call yourself Methusalem if those storable means of oil consumption ever run out. But still worth it, unless we have a quick recovery this century.

    YHC-FTSE's picture

    "I'm highly suspicious of Citi's call for higher gold on the backs of the biggest oil move in weeks."

    Ditto. And said as much (Even without oil moves) last week in anticipation of commodities forecasts. I wanted the squids to quote low gold prices for this quarter and I wondered then what they could possibly have in store for goldbugs if it went the other way.

    http://www.zerohedge.com/news/gold-and-silver-plunge-eur-reaches-15-mont...

    edited "a couple" to "last".

    navy62802's picture

    The answer is of course the Keynesian Final Solution ... War. Where we sacrifice our poor people by sending them to kill Iran's poor people. When the Keynesians have run out of ideas, their only answer is war.

    YHC-FTSE's picture

    +1 Seems very likely, which is unfortunate not just for the poor, but for everyone/everything. 

    malek's picture

    "We" listen to Citi analysts? I don't know on your side, but I for sure didn't move the gold price by $20.

    Just watching in astonishment here...

    GiantVampireSquid vs OWS UFC 2012's picture

    Everything Bernanke does has only one goal.  The super rich get richer, if there is money to be made with more QE, he will do it.  Oil import bans, risk of invasion, sure the price of oil may look like a smoking gun for inflationists, but Bernanke has pluasible deniability with all the other shit thats going on.

    The ECB is engaged in massive qualitative easing, further debasing the EURO, don't forget the currency wars.  I could care less who says what, and you are right to read between the lines.  For me gold is diversification, and long term the fundamentals are there for gold to retain it's purchasing power.  If the price collapses tommorow, or next year I'll be happy because I can buy some more.  If it goes up, I'll be happy I own some.  I cannot see anyone, anywhere increasing the quality of money, or reducing the quantity of money, so BTFD.

    dugorama's picture

    whoa! wait a minute here.... what?  qualitative easing? what the h - e - double hockey sticks?  we're now trading on relaxing standards on the quality of money? 

    I need a refresher course in monetary policy.............

    MoneyScraper's picture

    No limit on debasement--anywhere?  OK, that's how it feels (since Nixon "we're all Keynesians now..")  BUT, if only theoretically, there has to be a bound, right?  When no sovereign/bank bails out another--a true "Lehman" moment--when the Saudis or Chinese stop accepting dollars.  Then isn't some kind of "Marshall Plan" restructuring finally done, if for no other reason than to get the zeroes down on debt clocks...  What price GLD then?  Ergo, better oil, water, food, farmland, shelter IMO...

    Papasmurf's picture

    Higher oil prices aren't important because new cars have better fuel economy.  This is like the "miracle of productivity growth" greenspan talkes about every time the ponzi market went up from fed printing.

    midtowng's picture

    I hate it when Citi agrees with me.

    Right now I'm sitting on physical Gold/Silver and a bunch of cash. I'm waiting for the rally to become stronger and to see how the Euro plays out before buying more.

    HungrySeagull's picture

    Sit tight.

    Your Metal is YOUR asset if YOU OWN PHYSICAL.

    You might need that cash to get the Gasoline once the shooting starts. Or not even then.

     

    Just because one person says a number high and low and predicts a value in a future no one knows, the best we can do is stick to our own guns and continue to do what works for us.

    Not chase after two birds when one is in your hand already.

    tmosley's picture

    I'm sure it has nothing to do with the act of war the west just pulled on Iran.

    WonderDawg's picture

    So do we fade this call? I mean, it's Citi, right? Or did we switch and now agree with these turds?

    tmosley's picture

    You ignore it.  There is no viable information transmitted.  Trying to play the contrarian (by fading such recommendations) or the sheep (by trusting them) will get you killed.  You have to think for yourself, and do everything you can to minimize your risk.

    WonderDawg's picture

    True. Now if GS comes out and says the gold sell off is over, the urge to fade may be too strong.

    Honestly, though, I don't really listen to any of the TBTFs, just do my homework and make my own decisions.

    tekhneek's picture

    Just because Citi looked at a chart and decided to vomit on a keyboard should have no direct impact on your decisions.

    Not everything's a contrarian indicator. Some people just say stupid bullshit with no rhyme or reason.

    If Cramer or Tilson come out and say they're going short gold then there's your confirmation but don't play stupid. You know the name of the game.

    Keep stackin'

    YHC-FTSE's picture

    Well, your views are certainly popular and if you had typed "Not everyONE is a contrarian indicator", I would heartily agree. This is Citi we're talking about and not some honest, hard working Joe who can do the maths. We've yet to see all the commodities analysts put their neckties on the line so it is early days but I would rather eat the bits of wildlife my cat drags in than believe an analyst from Citi, even if his surname doesn't end with "man". Keep stackin' absolutely, but it's nice to know what's ahead, especially if a lower echelon squid calls $2400/oz.

    TheGardener's picture

    Calm down, it is just an act of international taxation.

    You know, or of just now, that not giving to them is some form of intentionally defrauding global taxes, or to be specific on their martially inflated terms : finance of terrorism !

    Hope none of us pays taxes to international state terrorism.
    If you do as I do on consumption taxes, god be with us.

    No one want`s war of course, but we duly have to collect our dues..

    P.S. Disclaimer : No one wants` to attack the last Aryan nation, they will have asked for it themselves , fools , as they are...Aryan none the less, fools all the more...

    hugovanderbubble's picture

    Fitzpatrick is great guy,

    also Maximov and Medina.

    LongSoupLine's picture

     

     

    looks like Citi needs to dump more gold at a higher price to cover their massive deleveraging (see: drowning) plan.

    Cdad's picture

    VIX...looks like it has finally found its footing.  @23 and change...as Europe approaches the cliff...is yet another instance of stupidity, as was all the hyper chatter about the gold rally being over.

    Stupidity abounds...brought to you by your corrupt and desperate NY, NY financial services industry.

    Hephasteus's picture

    That channel chart is fucked. This is the endgame. This is when global takeover happens ready or not. The only lines are going to be straight up and down.

    Spigot's picture

    Corrected Press Release:

    "We have finished suppressing gold to prevent the profitable pay out of in the money gold calls at 1600 and above. We are now positioned on the long side and have released out supression program so that you can provide us with healthy profits. We thank you for your cooperation in this matter. Yours, with warm hugs, TPTB.

    francis_sawyer's picture

    Corrected PR (alternate version)

    We all received our year end bonuses and quickly converted them to physical bullion during the shakeout...

    Thank you for playing...

     

    vato poco's picture

    Nice Corrected Press Release. Very cynical, very ZH, probably very correct.

    So how come no one ever seems to raise the possibility that our buddies the Iranians (with or without our complicity) are doing exactly the same thing in re oil? They're not stupid - surely they must have noticed the direct cause-and-effect relationship with "we talk tough and crude goes up; we ease off and crude goes down", right? They DO sell options on oil, don't they? But nooooo, here on ZH it's all about the imperialist warmonger Great Satan doing the bidding of their sinister Zionist puppetmasters, and hassling a small, freedom-loving idyllic land just to steal their oil and rape their women and/or cattle & goats. Just like the profs told us back in college!

    Why doesn't the simple explanation - 'creating the future brings great profit' - apply there?

    Spigot's picture

    It does in spades. That's how the rich get richer, regardless of the race, religion or creed. Its equal opportunity fucking at its finest!

    toadold's picture

    The Iranian Rial has been dropping like a gut shot goose. People with money have been converting or trying to convert it into foreign currencies and move it out of Iran.  The Mullahs have been screwing them on the official exchange rates.  A lot of fear and loathing going on in country, especiallly with the fuel subsidies cut off.  I kind of wonder what the black market for gold and jewels is now. 

    The Swedish Chef's picture

    Gold is just a bubble. RetardTrader and MillionDollarDouchebag said so.

    fuu's picture

    Did she finally find what she was looking for up in there?

    The Swedish Chef's picture

    No but after six or so months looking management here at ZH found her offensive. My best guess is that she got in the way of advertising.

    San Diego Gold Bug's picture

    $2400 will seem cheap when panic in the currency markets goes into overdrive.  This is still a year or two away as the banksters have lots of tricks (most not leagal) and ammo left including the printing presses which they are now disguising as swaps.  Thanks for the tip ZH on comparegoldprices.com. 

    HungrySeagull's picture

    And I thought 200 was stiff with 1500 a fantasy.

     

    I tell you this. I quake for the millions who have none.

    GBnotEU's picture

    Can you please stop plugging your website. I suspect that I am not the only person here who finds your spamming really annoying. The Bug part of your name is spot on. You really do bug me.

    We buy gold. We know where to buy gold.

    You plug your website every time you post. In fact it is probably the only reason that you post here. Give it a bloody rest!

    mess nonster's picture

    If they print, then gold has to go up. The only "modest" war in the ME has to exclude Iran. War with Iran = Global nuclear free-for-all.

    MFL8240's picture

    "If they print"???  Seriously, what do you think they are doing to keep bond yields where they are while all the goverments of the world are dumping treasuries??  You actually believe Bernanke?  lol, no one belives anything he says, he is the only person with less credibility than Obama and Geithner.

    SheepDog-One's picture

    Tryin to fill that bottomless pit with faster dump trucks....the more they dump in the deeper the hole gets.

    Good luck front running the lunatics.

    Cognitive Dissonance's picture

    Ready........Set........GO!

    sabra1's picture

    still amazes me how words can direct market movements! that's all that's left!

    SheepDog-One's picture

    But I bet this wasnt the only 'words' out there moving gold, oil also shooting higher as well. We'll hear more in a few hours.