The Sound of Silence is Deafening

Gold prices ended today’s trading session fractionally lower in an extremely quiet and slow manner. Bearish sentiment continues to dominate price action.

Gold prices have declined for the last seven weeks, with consecutive lower lows for six of those seven weeks. Since the presidential election was held on November 8, gold has lost approximately $200 value.

As we approach the onset of this year’s holiday season, gold prices are attempting to find support at a key technical level. We can expect liquidity and volume to decline as traders and investors close out trades and square positions before the Christmas holiday begins.

We certainly saw that effect today as gold traded in an extremely compressed range of seven dollars. With a range of only a couple dollars throughout the majority of today’s trading session, it is clear that many traders have already closed out their positions, and finished their activity for the year. As such, we should continue to see gold trading within a tight range and at holiday volume.

Gold Struggles to Hold Above Key Support Level

Recent lows have taken gold prices to a key and critical support level. After hitting the yearly high in July of 1380, prices have declined by almost 75%. Whether or not prices are able to consolidate and find support at this level will determine if gold can hold on to the remainder of this year’s gains.

It is clear that selling has been the predominant market characteristic, which began in July. This downside momentum increased exponentially immediately following last month’s presidential election. All things being equal,  we could expect to see a continuation of selling pressure throughout the remainder of the year. The best we can expect is a market consolidation that results in a stabilization of gold pricing as we complete 2016.

Given the recent declines, we could be witnessing a consolidation in price. However, it must be noted that bearish factions continue to dominate price action and market sentiment. On a technical basis, we continue to see prices declining, resulting in lower lows each week. Unless the gold price is able to trade back to 1170, the 61.8% retracement, the bearish faction will continue to dominate and influence market price.

The Dow Continues to Flirt with 20,000

The Dow closed fractionally lower, in essence unchanging, giving up approximately 15 points. Closing at 19,957, the elusive 20,000 is still within striking range. However, as the holiday season draws nearer, we can expect to see trading activity decline. That being said, look for increasingly quieter markets, with year-end position squaring dominating trading activity.

Wishing you as always, good trading,