Many Answers Blowin' In The Wind.
A perfect storm of sorts beat back gold and silver prices today.
There is still a lot to be accomplished if the U.S. is to take action in Syria with the backing of some allies. Whether President Obama will take action if he does not receive full Congressional approval is a matter of debate. One way or another, the action will be limited - surgical as the cliche goes.
So, for now, the safe-haven buying that was driving gold prices to 3-1/2-month highs last week due to rising tensions in the Middle East, has sputtered out.
Added to the loss of momentum were a couple of economic reports about the positive trends in the American economy.
The Institute for Supply Management's (ISM) non-manufacturing index rose to 58.6 in August from 56 the month before, a report from the Arizona group showed. The median forecast looked for a drop to 55. (Readings greater than 50 indicate expansion.)
The group's measure of new orders increased to 60.5 in August from 57.7 the month earlier. A gauge of employment in non-manufacturing industries advanced in August to a six-month high.
The growth in service jobs is of great importance because it is the category in which most Americans are employed. Manufacturing employment, which has also been improving, can see its employment picture change seasonally as well as through innovations in automation, inventory control and shipping. Energy has been a particularly bright spot in the service economy.
Overall unemployment claims also dropped again last week.
Further, a report from the ADP Research Institute of Roseland, New Jersey, showed companies added 176,000 workers to their payrolls in August, in line with the average over the last two years, after a 198,000 increase a month earlier. How that will affect the unemployment rate needle remains to be seen, but tomorrow the Department of Labor's "official" numbers on employment will be released. That will give us the answer.
"Stronger U.S. data is getting the market jittery again," Tom Power, a senior commodity broker at R.J. O'Brien & Associates in Chicago, said. "The strength in the dollar is working against gold."
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York said, "We've seen recently pretty good job gains and I think the employment indices and these surveys suggest that's going to continue."
The economic news is stoking thoughts that the Fed's QE3 will begin tapering after the September 17/18 FOMC meeting. If that happens - and it is by no means a lock - the reduction will be 15% or less. The question will remain whether mortgage buybacks or bond buying will suffer the bigger hit.
Finally, the euro weakened against the dollar beginning early in the New York trading day after European Central Bank President Mario Draghi said monetary policy will remain accomodative for as long as necessary and that interest rates should remain at present or lower levels for an extended period of time.
This drove the dollar higher, the euro lower, taking even more shine off the precious metals.
Wishing you as always good trading,
Gary S. Wagner - Executive Producer
Today’s strong downside activity in the precious metals markets can be seen as a continuation of our current “C” wave. This “C” should be the conclusion to gold’s current minor fourth wave. Since the market bottomed at 1181 we have seen effective rallies as well as corrections that fit well into our current Elliott wave model. If this model continues to provide valid information we should see gold bottom at around 1352 per ounce. This corresponds to a 50% retracement of the price move seen in the most recent minor wave three.
Today’s video will look at the details of yesterday’s trade. We will also examine critical support resistance levels currently in both gold and silver prices. The wildcard right now is the jobs report on one side and a potential conflict in Syria on the other side. How this wildcard unfolds could have a tremendous influence on gold and silver prices. Both Friday and next week should prove to be interesting but more importantly volatile to current precious metals prices.
Proper Action :
No open trades awaiting confirmation that current "C" wave has concluded
Silver long @ 23.51 Stop hit @ 23.15 -.36 Gold @ 1393.50 stop hit 1383,50 - 10
From the week of 05.17.2013
Click on bull below for current chart gallery
Gary S. Wagner - Executive Producer