Video-June-17-2013-Archives-Daily-Show
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Submitted by Konrad Urbanowicz on Tuesday, June 18, 2013 - 17:15.
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Golden Slumbers
Golden slumbers steal your eyes
Smiles await you when you rise...
- Lennon & McCartney
Everyone's eyes are turned to the Fed and the start tomorrow of this round of the Federal Open Market Committee (FOMC).
As we mentioned Friday, we believe the Fed - from Chairman Bernanke himself to outriding cowboy commentators among non-voting FOMC members to cranky old Paul Volcker and over to all sorts of analysts - have been wildly commenting about the direction the Fed is going to take regarding QE3 and the level of interest rates.
Of course, wild commentary is part of the fundamentals landscape. It is simply something that we have to put up with as gold traders. However, there is an extremely fine line between responsible, incisive comments from central bankers and eccentric, wild and irresponsible utterances.
When central bankers talk in absolutes, markets (we include all kinds of trading vehicles, not just precious) must react. And react they have.
Gold has been mired in a range. Silver is suffering. The stock markets have been battered and bond yields have risen significantly since this "loose lip" chatter about QE3 began. We adhere closely to the notion that there is not a practical split within the FOMC but an ideological one. Those members who want the process to taper or end simply can't believe that purchasing $85 billion per month in assets can possibly end happily. Once again we have Friedman vs. Keynes.
There is one sub-group within the hawks, though, that deserves our attention. It is one composed of those who believe that Congress and the President are sloughing off their bedrock duty of coming up with a firm fiscal policy to address soft spots in the American economy. (For instance, by funding 20th- and 21st-century style infrastructure projects.)
This governing failure has forced the Fed, which is reacting correctly thus far, to serve as both monetary governors and fiscal stimulators via a limited palette of colors.
The FOMC's QE3 actions have had a perverse effect on the committee. It as made doves more dovish and hawks more hawkish. Doves are asking - if not us, then who and what? Hawks are asking - when will the inflation volcano blow? (Although, one can't believe they are serious and rather are only voting on ideological grounds.)
At least as we approach the FOMC meeting volatility has had some of its rough edges sanded off. In fact, if we isolate New York spot trading from Asian and European trading, gold is about level in the big town this afternoon.
Oil has been creeping back up as schools end, summer progresses and vacation car travel begins with a vengeance. Rises in oil prices often presage a rise in other commodities.
The FOMC meeting closes on Wednesday. Bernanke's comments afterward should give precious a better sense of direction.
Wishing you as always good trading,
Gary S. WagnerExecutive ProducerMarket Forecast: On the weekend report we spoke about the weekly chart containing three concurrent Doji candles. These candles are distinguished by having a opening price on Monday equal or close to the closing price of Friday. They can represent either a pivotal point in the market or simply a point of consolidation. Today’s downside activity suggests the latter. In other words after a sustained drop in the market many times you will see the market consolidate attempt to form a base before moving to lower pricing. I believe that to be the case in today’s action. As we spoke about above and in the video reports all rests upon the Federal Reserve’s meeting which begins tomorrow.
Video archives:http://thegoldforecast.com/video/april-2013-archives-daily-shows http://thegoldforecast.com/video/may-2013-archives-daily-shows
Market Sentiment: Bearish, Range bound sideways market.
Support at 1360 resistance at 1380, 1403 then 1424
From the week of 06.07. 2013 COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer