Beige Book and Rate Hike Have Not Dampened Golds Run

According to the beige book which was released today, the U.S. economy has expanded at a moderate pace. This is based on activity from early April through the latter part of May. This information is supportive of many Fed members’ sentiments to implement an interest rate hike in June.

In a speech yesterday, Fed Governor Brainard said an interest rate hike “likely will be appropriate soon.” Recent statements by members of the Federal Reserve have contained similar verbiage, expressing the high probability of an interest rate hike being implemented during the June FOMC meeting.

However, even with an extremely high probability that the Federal Reserve will raise rates yet once again in June, gold prices have managed to stay firm and trade to higher ground. As of 4 o’clock Eastern Standard Time, gold futures (August 2017 contract) have settled at $1271 an ounce, a gain of $5.30 (+.43%) on the day.

On Friday of last week, gold prices broke above former resistance of $1260. Yesterday’s lower pricing did not inflict any technical chart damage, with gold prices closing at roughly 1262. Gold traded to a high of approximately 1260 at the end of February, which created that price point as a resistance area.  Furthermore, Friday’s breakout in gold led to it closing solidly above its 50-day moving average. This comes following the golden cross identified on Monday of last week.

Gold prices continue to move to the upside, trading to an intraday high today of $1276.80. Traders are now eyeing the recent highs at $1297.00 as a target for gold prices in the very near future.

Today a weak U.S. dollar provided tailwinds with physical gold closing up $5.80 at $1268.80. According to the Kitco Gold Index (KGX), a weak U.S. dollar contributed $4.40 of that gain, with the remaining $1.40 attributable to direct buying in the market.

On Friday of this week, the labor department will release U.S. employment numbers from May, with current estimates at roughly 210,000 new jobs added. Although it is widely believed that this estimate has now been factored into current pricing, any wide deviation between the current estimate and actual numbers could greatly move the needle one way or the other in gold prices.

Wishing you as always, good trading,