Gold Holds Value as U.S. Equities Soar

For the most part, gold has held on to the recent gains which occurred on Thursday of last week and continued into trading yesterday. Currently, gold futures basis the most active December Comex contract is trading down $2.30 and is fixed at $1,228 per ounce.

Gold traded to an intraday high today of $1235.90, which is just below yesterday’s high. However, gold could not hold onto its modest gains this morning as the U.S. equities markets surged to higher ground with the Dow Jones Industrial Average gaining 547 points as it closed at 25,798. In light of the tremendously strong risk on market sentiment, gold was able to hold its value and recent gains quite effectively.

Fractional gains in the dollar index today did not provide any real strong tailwinds or headwinds for current pricing in the precious metals. According to the KGX (Kitco Gold Index), spot gold is currently down $2.70 and fixed at $1,224 per ounce. Today’s decline is composed of selling pressure which amounts to $2.30, with the remaining $0.40 attributable to dollar strength.

FOMC Meeting Minutes to be Released Tomorrow

Traders and investors are awaiting the release of minutes from September’s FOMC meeting. The September FOMC meeting resulted in a rate hike of 25 basis points, this being the third-rate hike of 2018. The significant question which continues to loom is whether or not the Federal Reserve will initiate one last rate hike in December. Therefore, market participants will glean through the minutes looking for any possible insight as to the likelihood of a fourth rate hike this year.

The current administration has come out with harsh words for recent Fed action. Last week President Trump said that he thinks the Fed is making a mistake. “They are so tight. I think the Fed has gone crazy.”

Today the president ratcheted up his criticism of the current monetary policy when he said that the federal reserve is “my biggest threat.”

In an interview with FOX Business today, the president said that the Fed is raising rates too fast. “I’m not happy with what he’s doing because it’s going too fast. Because - you look at the last inflation numbers, and they’re very low.”

Our current studies indicate that there is strong technical support at $1,217 per ounce. This is based upon our Fibonacci retracement levels in which that price point occurs at the 0.618% retracement. Resistance occurs just above current pricing at $1,232.80 which is the current 100-day moving average, and then at $1,246 per ounce, which is the 50% retracement level.

Wishing you as always, good trading,