Gold futures trade to $1742 before profit taking moves prices lower

After hitting the highest price gold futures have traded to in the last seven years, $1742 per ounce, profit taking has taken gold prices below $1700. In trading overseas yesterday for a brief instant gold broke the former ceiling of $1703, creating a new high, which will now become short-term resistance at $1742.

As of 4:30 PM EST gold futures are currently trading down by $11.30 and fixed at $1682.60. Spot gold is currently fixed at $1650.86, which is a net decline of approximately nine dollars on the day. This decline incorporates tremendous dollar weakness which has softened the impact of traders pulling profits. Currently the dollar index is off by 0.82% and fixed at 99.93.

According to the KGX (Kitco Gold Index) earlier today spot gold was only seven dollars on the day. Most importantly that included dollar weakness which allowed spot gold to gain $14.90 on the day. However, when added to price weakness due to profit taking which amounted to $21.90, the end result is a seven-dollar decline.

Although U.S. equities were trading higher at the start of today’s trading session in New York, the Dow Jones industrial average closed off by 26.13 points, and is currently fixed at 22,653.86. Many analysts including myself believe that the current coronavirus pandemic continues to affect market sentiment favoring a more bearish tendency than during the recent run-up and rally.

The COVID-19 pandemic seems to be diminishing in many parts of Europe. At the same time the CDC (Centers for Disease Control)and the World Health Organization is warning that the next two weeks will contain the apex of infections in the United States. That being said when we look at statistics coming in from areas with the greatest concentration of the coronavirus it seems that their numbers are beginning to stabilize.

According to a report issued by MarketWatch today, infected individuals are beginning to recover, “The coronavirus is certainly scary, but despite the constant reporting on total cases and a climbing death toll, the reality is that the vast majority of people who come down with COVID-19 survive it. Just as the number of cases grows, so does another number: those who have recovered.”

Most importantly those that have recovered have done so by individuals that have fought the infection and have now created the anti-bodies needed to successfully keep the virus from replicating, killing off the virus. In theory once an individual has created the antibodies for a particular virus the cells “remember” viruses they have previously reacted to so they can quickly fight them off if exposed again to a particular virus.

Once this occurs in any population the number of new infections will begin to decline while the number of recovered individuals will increase. But according to warnings issued by the CDC United States has not yet seen a peak or apex based on the incubation period of this particular virus. That should occur this week.

The potential lasting impact is currently unknown and many analysts including myself believe that gold pricing could continue to trade to higher pricing. This will include a series of peaks and valleys which will inevitably contain higher highs during the peaks, and higher lows during the valleys.

Wishing you as always good trading,