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Sahmino callsGold

Cash Molten SteelXAUMELTBullish

Gold Melt Breaks Through the 1,150,000,000 Rial Resistance; the Engine Is Not Global Gold, It Is the Free Dollar's 14% Weekly Jump

Horizon: Short term (1 to 2 weeks, through Mehr 28, 1405)

Price when published

1,152,010,000 rials

That dayup0.6%

Support

1,150,000,000 rials

Resistance

1,200,000,000 rials

Invalidation

1,113,150,000 rials

The levels on the chart

Since writtendown1.0%

Conclusion

With the close breaking through the 1,150,000,000 rial resistance and setting a fresh 52 week high, the bullish view continues; but since the main driver is the free dollar's jump while global gold fell at the same time, we put roughly 60% odds on the melt staying above 1,150,000,000 rials (the new support) through the horizon and approaching 1,200,000,000 rials.

The evidence

  • Monday, Mehr 13, 1405's close of 1,152,010,000 rials broke through the published resistance of 1,150,000,000 and set a fresh 52 week high; the distance to that high is now 0%.
  • Global gold fell from $4,298 (Shahrivar 23) to $4,140.7 (Mehr 13), about 3.7%, while the free dollar jumped from 2,350,000 to 2,687,000 rials (Mehr 5 to Mehr 13), about 14.3%; the melt's rally is driven almost entirely by the rial leg.
  • With gold at $4,140.7 and the free dollar at 2,687,000 rials (both the Mehr 13 close), the implied value of a 17 karat melt mesghal is about 1,162,159,000 rials; the melt's premium is roughly negative 0.9%.
  • The melt trades above its 20 day moving average (1,055,502,500 rials) and has risen steadily over the past three weeks; 20 day volatility (1.55%) shows the rally has been fairly steady, not a single day spike.
  • Upcoming catalysts: US inflation and employment data and the Fed meeting for the ounce leg, and the Exchange Centre bullion auction for the rial leg; the Exchange Centre remittance dollar rose only 2.6% over the same span, meaning the free versus remittance gap is widening.

If it holds

If closes stay above the new 1,150,000,000 rial support, the base case bullish scenario continues, with price heading toward 1,200,000,000 rials.

If it breaks

If a close falls below 1,113,150,000 rials, the bullish view is invalidated and a reversal in the free dollar should be examined.

What to watch

The path of the free dollar and global gold in coming days, and the Exchange Centre bullion auction; a simultaneous stall in the free dollar and gold could deepen the negative premium.

Every call on this symbol

22 calls; the move to the next call from the prices when written

  1. 6 October 08:55BullishGold Melt Breaks Through the 1,150,000,000 Rial Resistance; the Engine Is Not Global Gold, It Is the Free Dollar's 14% Weekly Jump1,152,010,000 rialsdown1.0%
  2. 3 October 13:42BullishCash melted gold hit a fresh record but its growth lagged the ounce-dollar math; the bubble is around negative 1.4 percent1,137,580,000 rialsup1.3%
  3. 30 September 13:24BullishNew peak for cash molten gold: crossing the 1.1 billion rial channel, with a bubble still negative1,112,050,000 rialsup2.3%
  4. 29 September 13:28BullishCash molten gold also broke the 1,060,450,000 rial resistance; today's main driver of the jump was the free market dollar1,080,790,000 rialsup2.9%
  5. 29 September 08:46BullishCash Ab Shodeh passed the 1,055,550,000 rial resistance; now almost level with the calculated value from ounce and dollar1,056,150,000 rialsup2.3%
  6. 28 September 13:24BullishNeutral view shifted to bullish: spot melt-value is still about 0.8 percent below the computed value of ounce and dollar1,048,960,000 rialsup0.7%
  7. 27 September 13:23NeutralGold ounce fell and the dollar rose; cash molten gold still remains below the 1,050,840,000 rial ceiling1,032,850,000 rialsup1.6%
  8. 21 September 11:22NeutralThe risk I wrote yesterday played out in one session: 55 percent of today's drop was the cash premium melting away, not the ounce and not the dollar1,025,510,000 rialsup0.7%
  9. 20 September 11:45NeutralThis time the ounce didn't budge: half of today's jump came from the melted dollar and the other half from domestic froth1,045,030,000 rialsdown1.9%
  10. 20 September 08:42NeutralBoth legs of cash molten gold rose at the same time and broke our published ceiling, but neither of these two legs has a trend1,030,560,000 rialsup1.4%
  11. 19 September 11:21Neutral82 percent of today's cash melt growth was built by the premium, not the ounce and not the dollar1,021,520,000 rialsup0.9%
  12. 14 September 11:10NeutralOunce down 0.74 percent and dollar up 1.51 percent, and cash melt stood exactly on the floor we had named1,007,040,000 rialsup1.4%