The Number Ten

The number to focus on today is the number 10. Gold traders are witnessing a run on the precious yellow metal, now in its 10^th day for consecutive price gains. The last time traders witnessed ten consecutive trading days resulting in higher prices was back in 2011. In fact, that rally resulted in a total of 13 consecutive higher trading days, one of the longest consecutive daily price advances in gold on record.

However, most analysts will agree that 2011 was a much different time for gold traders. 2011 was the landmark year in which gold prices ran to $1920 per ounce, the all-time record high. In July of 2011, gold was trading at roughly $1480. Then, over a period of 13 trading days, gold prices had consecutive price gains resulting in $120 price gain taking an ounce of gold to about $1600.

Inasmuch as 2011 was a much different time than 2018, and economic factors and events were much different, it is interesting to note that it has been over six years since gold was able to have that many daily consecutive price gains.

It is also interesting to note that this recent rally, which began in the middle of December, is occurring during a period of time when equities are running at all-time record highs creating one of the strongest risk-on environments witnessed by traders and investors.

As of 4:00 PM Eastern standard time, February gold futures are trading at $1323.80 which is a net gain of $5.30 (+0.40%) on the day.

Physical gold is currently fixed at $1322.20, which is a net gain of $9.70. Today’s gains can be seen as a combination of a weakening U.S. dollar and buyers bidding up gold’s trading price. According to the Kitco Gold Index, $5.50 of today’s gains is directly attributable to buying, with the remaining gains of $4.20 a direct result of a weakening U.S. dollar. In other words, gains in gold today are composed of four parts buying and three parts dollar.

This illustrates that the recent upside moves witnessed in gold have clearly had support as a result of a weakening U.S. dollar, but traders and investors are definitely a major component in this rally.

Tomorrow traders and investors will focus on the release of tomorrow’s jobs report numbers. Today the ADP national employment report was released, with the actual numbers coming in well above original estimates. It was widely expected that the report would show an increase of 195,000 jobs, whereas the actual numbers came in at 250,000.

Tomorrow the Labor Department releases its U.S. employment report and is currently estimated to show an additional 180,000 new jobs added in the month of December. A bullish jobs report could certainly put some bearish pressure on the current rally.

Wishing you as always, good trading,