Plenty OF Fight In The Bull
Before facing the alphabet soup of reports due out next week, gold traders first tried pushing gold down hard only to see it begin rebounding in the afternoon. Not that we should draw too many conclusions from a slow, lazy Fridays. The Long Island Expressway and Jersey turnpike saw big-time traders heading for their beach houses early this morning. (OK, and their homes in upstate New York and the Berkshires in Massachusetts.)
FOMC, GDP, ECB, and payrolls all will see news flashes next week. Add to that the lighter volumes and we have the potential for a choppy week.
In more concrete news, Russia and Kazakhstan added modestly to their gold hoards while Turkey for the first time in a year allowed their holdings to fall.
"The flows in the central banks are pretty small now, the big shifts are gone," Justin Smirk, senior economist at WestPac Banking, said from Sydney. "Central bank buying might give us a little bit of a floor, but they're just soaking up some of what the ETFs are selling. You're not going to see central banks coming in to push the price up."
In a bit of wishful thinking, consumers in India have depressed purchases of gold jewelry by 40%, hoping for prices to drop further. Might as well wish for a pony for your birthday.
John Ing of Maison Placements Canada said "The good news is that my expectation is we've seen the bottom for the gold prices. So the [index is] going to be much higher. [When the price reaches] $1,500, $1,600, they can make money." Maison is known as a rather conservative investment house in Toronto.
Of course, what happens in the American economy and to a lesser extent in Europe will drive prices via what notions analysts hold about further easing. July, though, as in New York and London, a slow month for changes in central banking approaches. Unless there is some sort of absolutely revolutionary news economically, we can expect the U.S. Fed to hold steady and Europe, pushed by the Germans, may slow their recovery "easing" slightly.
We still have to hear from the Chinese next week, who may just be waiting to see what goes on in the FOMC and ECB meetings before announcing their moves to re-boot the big Asian economy. Japan may be doing the same although their course plot points seem to be pretty much set.
Wishing you as always good trading,
Gary S. Wagner
On a technical basis today’s move both to the downside in early trading and it’s quick recovery fall in line with our current Elliott wave model. The last minor impulse wave three took gold prices to a current resistance point just below 1350 per ounce. What followed at our current market scenario was to see the beginning of a corrective wave four. It seems as though way for is going to be comprised of a basic ABC count. Our first corrective wave moved gold prices from 1347 to an intraday low of 1308. The second wave within wave four was a counter wave, wave B. typically in an Elliott wave model wave B will move anywhere from 50 to 75% that of the move seen in wave A. when viewing today’s video as well as looking at our current charts you will see that Wave B terminated precisely at a 75% retracement of wave A which is 1338.
This takes us to our current market scenario in which we saw the final corrective dip in gold as it made an intraday low today of 1311.80. The resilience and the speed in which gold prices bounced off of those lows was significant and a primary trigger in determining that wave four at concluded and we were back in an impulse phase. At the time of this writing we currently have gold trading at approximately 1330 to 1332. Obviously we want to maintain our long positions in both gold and silver, and today’s video will not only detail our current trade but will clarify our current strategy.
Long gold @ 1321 Stop below 1300
Long silver @ 19.65 stop below 1945
Click on chart below to view gallery
Gary S. Wagner - Executive Producer