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Can The Fed Get It Straight?
Even the most sober person's head would be spinning after observing the markets this week. And we don't restrict that to simply the precious metals markets. There is a lot of fluttering and swooning followed by exuberance.
The Syria factor seems to have been washed out of gold and silver movement finally, but the concern over what the Fed will or won't do come Tuesday and Wednesday of next week is casting a long, if irregular shadow over analysts and traders.
As of 4PM New York time, gold has turned up slightly. Silver is up 2.25%. The other precious metals also are up, showing some strength.
Retail sales in the U.S. rose a paltry 0.2 percent in August, the smallest in four months. That number followed a revised 0.4 percent July gain that was bigger than previously estimated, the Commerce Department reported today in Washington. The median projection had called for a 0.5 percent advance. An interesting detail: retail action excluding motor vehicles rose 0.1 percent.
Not surprisingly, consumer confidence also swooned, falling to its lowest level since April.
Higher mortgage rates, slow hiring and a failure to get money into consumers' hands is holding back the world's largest economy now. Forgetting ideology for a moment, as a practical way to build an economy funneling most of the income gains to the top 1% is not the way to build a robust country. More often we are hearing - from moderate economists - the word "dangerous" applied to the growing and accelerating income inequality in the United States.
Of course, we are all wondering what the Fed will do on the 17th and 18th. There seems to be a lot of jostling on the FOMC, although mercifully they have kept their mouths shut publicly since a flurry of commentary in July through mid-August. Bloomberg said yesterday:
"They will probably lower their estimates for growth for this year and next for the third consecutive time. Simultaneously, they are forecast to start scaling back the $85 billion in monthly bond purchases they have been relying on to stoke the recovery."
Now does that make sense? Every single yearly projection has been revised downward since 2010. No staying the same, no increase. Flat or going negative.
Could it be that the Fed has lost faith in its own devices and is concocting something more than QE3 - or something at least different?
"As a central bank, you are lowering your growth forecast, inflation is running low, and hiring is slowing and you are going to taper your asset purchases?" said Julia Coronado, chief economist for North America at BNP Paribas in and a former member of the Federal Reserve Board's forecasting staff. "That is a communications challenge.
Thank you. No wonder the markets are being yanked around like a toy poodle on a leash.
Wishing you as always good trading,
Gary S. Wagner - Executive ProducerMarket Forecast:There seems to be a little less luster in gold as this week’s trading amount to a net loss of over 5% per ounce. Breaking through a critical support level of 1334 gold plummeted to an intraday low of 1304 30 before short covering rally the precious metal to a positive stance on the day of $5.40 (as of 4:45 EST). Gold is settled for the week at roughly 1325 an ounce. Silver also traded well off of it slows to close $.47 higher at 22.31 As you will see in today’s video, there is a critical support level in gold between 1305 1308. The fact that gold hit an intraday low just below that price point and then rallied higher to me is significant. With the upcoming FOMC meeting next week, the thought of the onset of tapering has eroded any premium which exists within the market due to the belief of continued quantitive easing. Add a reduced geopolitical uncertainty as the United States, Russia and Syria begin negotiations to disarm Syria’s cash of chemical weapons, and you had the makings of a precious metals meltdown. Today’s video will look at critical support levels in both gold and silver. In particular if 1305 holds in gold through the beginning of the week, it might be prudent to initiate positions within the market. Currently we have been sidelined with no active positions in gold or silver, I would look for that to change the first part of next week.
Proper Action :
We remain on the sidelines. After witnessing this weeks melt down in gold and silver prices, today's recovery on the close was a welcome relief. Look at enter the market next week, as long as 1305 in gold holds.
COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer