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Another Volatile Day for Gold as it Breaks Below $1500

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Now for the fourth consecutive day gold futures have traded lower, in today’s case moderately lower. As of 4:26 PM EDT, December futures are currently trading at $1494.80, after factoring in the current decline of $16.30. Considering that on September 5 gold had opened up at just over $1560 per ounce, this current decline might be of short duration, but it has taken pricing over $65 lower.

While many analysts including myself expected pause and consolidation beginning a corrective period, my outlook remains extremely bullish long-term. The fact of the matter is that the big boys are buying such as the central banks globally, and the People’s Bank of China buying over hundred tons in the last nine months.

As reported in MarketWatch, analysts at Citi said, “From a birds-eye view, low(er) for longer nominal and real interest rates, escalating global recession risks—exacerbated by U.S.-China trade tensions—heightened geopolitical rifts amid rich equity and credit market valuations, coupled with strong central bank and investor buying activity, are all combining to buttress a bullish gold market environment.”

On a technical basis we have been looking at gold at approximately $1560 as a short-term top, over the last six trading days gold was only able to close above that price point on a single occasion, which occurred on September 4. The following day gold would open above $1558 and trade to a low of $1515 in a single trading session. This selling continued to current pricing which is now below $1500 per ounce. There is a small possibility that gold will find support at $1490 per ounce which is based on a Fibonacci retracement and extension. If prices breach that critical level gold could trade as low as $1449 per ounce.

That being said, it is the fundamental events that are driving current market sentiment. It all begins with the trade war and the cascading repercussions that that event creates. First and foremost a slowing global economic growth. Which has forced the hands of many global central bankers to cut rates, making cheap money more available. The tariffs are beginning to bite in the pocketbooks of both the Chinese and Americans, who are collectively paying more for the other’s imports.


Wishing you as always, good trading,

Gary S. Wagner - Executive Producer