Note 2: Since B-C is less than a 50% pullback, means C-D rise should be approx. equivalent to the A-B rise. However, given the pivotal “consumer mental block” demand sensitivity to $100+ oil, the Analyst factors in a modest 20% reduction of the A-B rise. Also, considering the premature peaking at $99-100 because of the unexpected Saudi announcement (prematurely stopped upward momentum) and resultant momentum dragging sideways price movement since, Analyst factored in another 10% reduction, yielding a C-D rise of $53 x’s .7, or $37.
That yields an approximate “D” pricing range as noted.
From Point D, the price can be arguably projected to then retrace and stabilize to/in the Analyst’s suggested Finbonacci “confluence area” of $75-85 per barrel.
Pricing Analysis Application Conclusion: As respects thwarting Commulism, the sooner to Point D and then to the confluence area, the better as reasoned earlier.
The professional speculators are leveraging fed rate cuts and dollar weakness et al to suck in buyers to drive the price to artificial and unsustainable levels in the “near to intermediate” term, not long term.
Gold:
As respects gold, a similar going forward yet far more exaggerated pricing case when comparing both the fundamentals versus its chart action’s accelerated rise to $900+, coupled with its historic inflation adjusted high. While oil teeters and nearly touched its inflation adjusted high, gold is less than half of its own. Not to say gold will too rise to its inflation adjusted high which would be approx. $2,100 per ounce but rather a much more significant percentage move to come in gold than what oil has left in it. Afterall, the prior 1980’s pricing high in “gold” had huge speculation already built into it, whereas “oil’s” previous historic high was more heavily fundamental based.
The recent surging gold price rise is reflecting some fundamentals but even more inflation speculation, which arguably from above is built upon other (oil price/dollar/commodity prices, etc.) speculation, not fundamentals, coupled with a market viewpoint that Fed rate cuts are always inflationary when instead as argued below may not necessarily be so, at least to the level some predict.
As done for oil, given gold also being a “Commulism Impact Factor”, here then is the Analyst’s illustrative Fibonacci pricing case interpretation for the precious metal:
In applying Fibonacci pricing ratios to the gold price chart, a case can be at least argued for discussion purposes, for the Fibonacci pricing point ABCD rise as follows:
- Point A (A1) - $430
- Point B - $936 (recent near/intermediate top)
- Point C - $775-825 (pullback - Note 2)
- Point D - $1,350-1,400 (Note 3)
Note 1: The temporary power outage generated mine disruptions in South Africa should not impact the analysis.
Note 2: With the dramatic fed rate cuts already and still to come, further fueling the speculative inflation and dollar weakness fires, the Analyst assumes a less than 38.2% pullback, using 30% (of the A-B rise) instead to provide the approximate C pullback range.
