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Breakout in gold takes futures to a high of $2043.40 in striking range of record high

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A solid breakout in gold moved futures pricing well above $2000 in trading today. Currently, the most active June 2023 contract is trading up $39.10 or 1.94% and fixed at $2039.40. That puts gold within striking range of the all-time high of $2088 as well as the record closing price for gold futures at $2069.40.

Dollar weakness contributed roughly 25% of the gains in gold today but it was market participants actively bidding the precious yellow metal higher that caused this current rally to accelerate. The dollar is currently down 0.53% and the dollar index is fixed at 101.25.

The primary fundamental event that propelled gold well above $2000 was weaker U.S. economic data. This data suggests that the Federal Reserve could certainly consider slower rate hikes and a pause of rate hikes sooner.

For the first time since May 2021, available new job positions have dropped below 10 million. Today CNBC reported that “Job openings fell below 10 million in February for the first time in nearly two years, in a sign that the Federal Reserve’s efforts to slow the labor market may be having some impact. Available positions totaled 9.93 million, a drop of 632,000 from January’s downwardly revised number, the Labor Department reported Tuesday in its monthly Job Openings and Labor Turnover Survey.”

Because the Federal Reserve has been laser-focused on the extremely robust labor market as it uses its tools to reduce inflation today’s report confirms that recent action by the Federal Reserve is beginning to have an impact as seen in the contraction of job openings. T

The probability that the Federal Reserve will not raise rates at the May FOMC meeting has increased dramatically. According to the CME’s FedWatch tool, there is a 58.7% probability that the Federal Reserve will leave its terminal rates of 4.75% to 5% and beginning a period of pausing rate hikes. However, there remains a 41.3% probability that the Fed will raise rates by ¼% in May.

There is no technical resistance in gold futures until $2069 the highest closing price for gold futures on record. There is solid support for gold at $2013 which is the 38.2% Fibonacci retracement of the most recent leg of the rally. In other words, there is a high probability that gold futures will not only hold above $2000 but challenge the all-time record close.

Wishing you as always good trading,

Gary S. Wagner - Executive Producer