It's Hard To Argue With Facts
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PREMIUM MEMBERS
Being on the right side of a trade is comforting.
Gold prices dropped Monday when a better-than-expected U.S. factory report beat expectations and fueled demand for the dollar by shoring up expectations that the Federal Reserve will begin to scale back monetary stimulus programs in early 2014.
The dollar found strength early after the Institute for Supply Management (ISM) reported that U.S. manufacturing activity in November expanded at its fastest pace since April 2011, fueling sentiment for a more robust economic recovery down the road.
The ISM manufacturing purchasing managers' index rose to 57.3 in November from 56.4 in October.
Analysts were expecting the index to fall to 55.0, and the surprise uptick sparked demand for the dollar.
The report said production and new orders rose about 3 points to 62.8 and 63.6, respectively, while the employment component of the index indicated some improvement in the labor market in November, rising by a shade over 3 points to 56.5.
The Fed's $85 billion in monthly bond purchases aims to force feed recovery by pushing down long-term interest rates and weakening the dollar in the process with action plus talk derailing a stronger greenback.
Additionally, overall manufacturing data coming out of the European Union showed a rise to 51.6 in November from 51.3 in October. Any reading above 50 suggests growth. There was also a slightly upbeat report on China's manufacturing sector released over the weekend. This small handful of economic data worked against the precious metals bulls.
The gold market laughed off a number of international news developments, perhaps too full of Thanksgiving turkey to think clearly.
The situation between China and Japan, and by extension, the United States, is worsening. Rioting and strikes in Ukraine are bringing with them the threat of Russian intervention. Thailand is also on the verge of complete civil unrest.
But fundamentally, gold is not being viewed as a haven as it has been historically, and apparently no news at the moment is going to shake that feeling.
As always, wishing you good trading,
Gary S. Wagner- Executive Producer
Market Forecast:
Over the last week we have not only been looking for lower prices, but anticipating a break below 1225, which has been the current intraday low. Breaking through this low has been the precursor necessary for the market to retest the record low (since gold hit an all-time high above 1900 per ounce), which is at 1181.
Last week roughly on Wednesday we recommended that traders begin to trail stops in both our gold and silver trades to protect some profit regardless of where the market went. After we lowered our stops to 1261 the closest gold prices came to that stop would be 1255 last week. Now we have the market firmly below 1225. This price point does have historical precedents behind. We have seen this price be both a point of support as well as resistance. Today's video will closely detail where we believe the most logical place to trail our stops should be. Over the next couple of days we will send out a trade alert detailing exact stop placement price. We are looking overall for a continuation of lower pricing. And we believe that we could see the market retest 1181.
Proper Action
Maintain Gold Short at 1276 stop @ 1261
Maintain Short silver @ 20.47 stop @ 20.50
COT LINK See previous weeks in Historical Commitments of Traders Reports.
Click on bull below for current chart gallery
Gary S. Wagner - Executive Producer