Gold-GameStop Connection? It's an Emotions Game

1. Gold-GameStop Connection?
It's an Emotions Game

2. Points To Be Covered Today:
• Factors Affecting Gold Prices On A Daily Basis
• Have You Heard About Gamestop?
• Gamestop Stock Price Spiked, Gold Was Topping
• Gold Prices Continue To Struggle
• XAU/USD Daily Chart
• Moving Average Convergence Divergence
• Gold Fundamental Overview

3. Factors Affecting Gold Prices On A Daily Basis
• There are many factors affecting gold prices on a daily basis, but…
how can GameStop stock be one of them?
• Given today’s pre-market slide in gold, it seems that the triangle-
vertex-based turning point worked once again. Declines are likely
next.
• While miners and gold were almost flat yesterday, silver’s daily
upswing was notable.
• Nothing to write home about, but it was visibly bigger than what we
saw in gold and miners.
• These moments – when silver outperforms on a very short-term
basis – tend to take place right before the prices of the precious
metals and mining stocks decline.

4. Factors Affecting Gold Prices On A Daily Basis - I

5. Have You Heard About GameStop?

6. Gamestop Stock Price Spiked, Gold Was
Topping
• Yesterday’s sizable price spike is something that we saw several
times this year.
• I’m not taking into account the January rally, as it was a specific
forum-activity-based upswing that seems to be of one-of-a-kind
nature.
• Except for yesterday’s price spike, there were also four other similar
spikes.
• Let’s check if there was any kind of regularity on the gold market at
the same time.
• It turns out that in all four cases when the GameStop stock price
spiked, gold was topping.
• Does it make any sense, and can one, therefore, count on this being
repeated?

7. Gold Was Topping

8. The Gamestop Trade
• Actually, it does make sense. The assets are not really directly
related, but they are related in terms of people’s emotions.
• The GameStop trade was quite an emotional one, people were
jumping on board based on fear of missing out regardless of
anything else.
• And nothing really changed since that time. The current
valuations of the stock seem to be based on the same
emotional aspect along with people’s ability to finance the
purchases, perhaps based on leveraged stimulus-based funds.

9. Yellow Metal Moved Lower
• And if the market is emotional in one specific way, it could
impact more (all?) assets in one way or another.
• In the case of gold, it seems that when emotions (as indicated
by GameStop stock) spiked, gold was topping.
• Consequently, the price spikes in GameStop might be a
barometer for a specific type of emotionally driven purchases.
• The yellow metal moved lower today, close to its triangle-vertex-
based reversal. Consequently, the top might be in based on just
that indication, and there are plenty more coming from other
markets.

10. XAU/USD Eyes Weekly Lows Near $1775 Ahead Of Jackson Hole
Showdown
• Gold prints losses following the previous day’s decline on Thursday.
• US Dollar Index bounces back to near 93.00 ahead of Jackson Hole
Symposium.
• Lower US Treasury yields capped the downside for the precious metal.
• Gold has resumed its bearish momentum in the European session, extending
losses further below the $1800 mark while targeting the weekly lows of $1777.

11. The US Dollar Remains Unabated
• The buying resurgence around the US dollar remains unabated so
far this Thursday, as a flight to safety underpins the greenback’s
safe-haven appeal.
• Meanwhile, markets resort to repositioning their dollar trades ahead
of the all-important Fed’s Jackson Hole Symposium, starting later
on Thursday.
• Also, in focus remains the US Q2 GDP and jobless claims data for
fresh trading cues.

12. Gold Price Is Challenging The 21-daily Moving
Average
• From a technical perspective, gold price is challenging the 21-Daily Moving
Average (DMA) at $1785 once again.
• A daily closing below the latter could confirm a bearish reversal following a
rejection at the 200-DMA at $1810 earlier this week.
• The next stop for the bears is seen at the one-week lows, below which the
August 16 low of $1771 could come into play.
• Alternatively, recapturing 50-DMA at $1791 on a sustained basis is critical to
attempting a meaningful recovery towards the $1800 level.

13. Gold Prices Edge Lower
• After testing the high of $1,805 in the overnight session, gold prices edge lower on
Thursday.
• Prices dip toward $1780 in the US session but bounced back above $1,800.
• Again, the precious metal started the journey to the south after breaking the $1,800
level.
• At the time of writing, XAU/USD is trading at $1,788, down 0.11% for the day.
• Investors ditched the yellow metal on reducing the risk of the Delta coronavirus
concern, which could derail the pace of global growth economic recovery.
• The sentiment shifted after US FDA fully approved Pfizer/BioNTech vaccine.

14. The US Dollar Index & Market Sentiment
• The US Dollar Index, which tracks the performance of the greenback against
the basket of six major currencies, remains strong near 93.00.
• Market sentiment turns cautious ahead of US Federal Reserve Chair Jerome
Powell’s speech on Friday, which could provide a hint over economic stimulus.
• But the narrative post the US central bank’s last policy meeting suggests
Powell might avoid making any firm commitments about the timing of tapering,
but might drop a signal it will be announced before the end of the year.

15. Gold Prices Are Expected To Trade Sideways
• The lower US Treasury yields reduce the opportunity cost of holding the
bullion metal.
• Meanwhile, the precious metal’s support from coronavirus downside risk,
global growth worries and geopolitical tensions are countered by a weaker
investor interest.
• Global stock markets were mixed up on Thursday, which lends support near
the lower levels.
• Gold prices are expected to trade sideways ahead of the US GDP index data
and Initial Jobless Claims.

16. Gold Prices Continue To Struggle
• The gold prices continue to struggle near the $1,800 mark lately.
• Broadly speaking, prices are under selling pressure below the $1,830 level on
the daily chart.
• XAU/USD slips below the 50-day Simple Moving Average (SMA) on
Thursday, which could prompt more downside movement in prices.
• The formation of a ‘Spinning Top’ on August 24, followed by a red candle
portrays a perfect picture of the beginning of fresh downward price action in
gold.

17. XAU/USD Daily Chart

18. Moving Average Convergence Divergence
• The Moving Average Convergence Divergence (MACD) remains
neutral in the oversold zone.
• A downtick in the MACD indicator would confirm the downside
momentum.
• A sustained break below the $1,780 would make the journey toward
the south for the prices toward the yearly low levels achieved on
August 9 at $1,687.78

19. Gold Fundamental Overview

20. Gold-GameStop Connection?
It's an Emotions Game

21. Thanks for listening
Gold-GameStop Connection? It's an Emotions Game