What Happened After U.S. Labor Day

1. What Happened After U.S. Labor Day
Gold Price Dip

2. Points To Be Covered Today:
• This Week Gold Price
• How Did Gold React
• Gold’s Post-U.S-Labor-Day Performance
• How Far Gold Usually
• Gold Was Likely To Decline This Week
• What Happening In Gold & Gold Stocks
• Gold Slides After Hitting Resistance At 1,834

3. This Week Gold Price
• On Friday, gold soared based on the surprisingly
weak jobs report.
• This week, gold declined over 1.5x as much as it
rallied on Friday, and it happened based on… no
news announcement.
• I wrote multiple times in the past that gold
doesn’t need a trigger to decline if it’s clear that it
really wants to do so based on its trend and its
relative strength (or lack thereof) compared to
things that should make it move higher.

4. How Did Gold React
• Yesterday’s decline serves as a perfect
confirmation.
• What happened? Nothing.
• How did gold react? It declined by over $30 from
Friday’s close.
• Ok, it’s not 100% correct that nothing happened.
U.S. Labor Day happened, and I previously
emphasized how very likely it was for gold to
decline after this day, based on a very specific
and efficient cyclicality.

5. Gold’s Post-U.S-Labor-day
Performance
• The cyclical nature of many areas of life is present in
the markets, and it is usually the case that the seasonal
factors have only a mild effect on the prices and other
factors are much more important, as they are specific
to a given situation.
• Sometimes, however, we have a recurring event that’s
so precise in its implications and so accurate that its
importance could dwarf other techniques.
• This could be the case with gold’s post-U.S.-Labor-Day
performance.

6. Gold’s Price Performance Around The
U.S. Labor Day
• A poet might say that at that time a golden dolphin jumps
joyfully into the air, shining briefly in the evening sun,
preparing for a deep and dangerous dive.
• A data scientist might say that 10 out of 10 efficiency with
regard to short-term implications and 8 out of 10
performance with regard to medium-term implications is
something that seems opposite to the efficient market theory,
even in its weak form.
• And a trader might say “great! let’s make some money on it!”
• I’ll let you be the judge as to which approach is best, while I
will feature my observations regarding gold’s price
performance around the U.S. Labor Day.

7. Gold’s Price Performance Around The
U.S. Labor Day - I

8. Gold Almost Always Declined
• You see, in the previous 10 years, gold almost
always declined profoundly right after the
U.S. Labor Day — I marked that on the above
chart with red, dashed lines.
• There were only two cases (in 2015 and in
2018) when gold didn’t slide profoundly after
that day, but… it was when gold declined in
the short term anyway.
• There was simply no major downswing later.

9. How Far Gold Usually
• In other words, in all 10 out of the previous 10 years,
gold moved lower in the short term after the U.S.
Labor Day.
• Of course, it’s debatable what one describes as the
short term. In this case, I mean a period between a few
days and a few weeks.
• Then again, if you look at the chart, it’s clear what we
can expect.
• Please have a look at how far gold usually fell (red
lines) and how far it fell during the exceptionally bullish
years when it declined just in the short run.

10. Gold Was Likely To Decline This Week
• This is very important, as it tells us that even if gold doesn’t
decline this week, it will be very likely to do so based on
this surprisingly accurate cyclicality.
• So, gold was likely to decline this week, and it has done
exactly that so far.
• But that’s not the most important point of the above quote.
• The most important point is that in 8 out of the previous 10
cases of post-U.S.-Labor-Day declines, these declines
were big.
• This week’s $30+ decline in gold may seem sizable on a day-
to-day basis, but it’s nothing compared to what’s likely to
happen based just on the above-mentioned analogy.

11. What Happening In Gold & Gold
Stocks
• Moreover, that’s not the only profoundly
bearish analogy out there.
• The link between now and 2013 is very
strong, not only in terms of what’s
happening in gold but also in terms of
what’s happening in gold stocks.

12. Gold Invalidated Its Breakout

13. Similar Long Term Patterns
• I marked the most similar long-term patterns with
yellow rectangles. The blue ellipses and red rectangles
emphasize the comparable performance in
the RSI indicator, as well as in the MACD indicator, and
in terms of gold price itself that recently moved above
its 40-week moving average and close to its 60-week
moving average.
• It’s quite clear that what we see right now is a very
good rhyme to what we saw at the beginning of 2013.
• And if there ever was a good time not to be long gold
(except for owning it as insurance).

14. Similar Long Term Patterns - I

15. HUI Index Points
• The long-term HUI Index points to the same
thing.
• Back in 2013, the biggest corrective upswing that
we saw after the breakdown below the broad
(marked with green) head and shoulders pattern
took gold stocks above 8% higher.
• We saw the same thing in the last two weeks –
gold miners moved up by about 8%, and they
started this week with an almost 3% decline. It
seems that history rhymed once again.

16. Gold Slides After Hitting Resistance At
1,834
• XAU/USD traded lower this week, after hitting
the key resistance barrier of 1834, which
stopped the metal from moving higher on July
15th, 29th, and August 4th.
• Overall, the metal remains below the
downside resistance line drawn from the high
of August 6th, 2020, and thus, we would treat
the recovery started on August 9th, as a
corrective move of a broader downtrend.

17. Gold Slides After Hitting Resistance At
1,834 - I
• A clear dip below 1774 will confirm that the latest
recovery was just a corrective move and could
initially target the low of June 29th, at 1751,
where another break could see scope for
extensions towards the low of August 11th, at
1724.
• That level provided support on April 13th as well.
If that level is not able to stop the bears either,
then we could experience extensions towards the
1683 territory, which provided strong support
back in March and now on August 9th.

18. RSI & MACD
• Looking at our daily oscillators, we see that
the RSI turned down and just touched its toe
below its 50 line, while the MACD, although
slightly above both tis zero and trigger lines,
shows signs of topping as well.
• Both indicators suggest that the latest
recovery has run out of steam and increase
the chances for the metal to fall more.

19. Bulls Have Gained Full Control Of
Gold
• On the upside, we would like to see a strong
move above 1917 before we start examining
whether the bulls have gained full control of
the precious metal.
• The bulls may then get encouraged to push
the action towards the high of January 6th, at
1960, the break of which could see scope for
extensions towards the high of September 1st,
at 1993.

20. What Happened After U.S. Labor Day
Gold Price Dip

21. Thanks for listening
Gold Price Dip