Slight Risk On Sentiment and Profit Taking Dent Gold for Now

June 28, 2016 - 5:12pm

 by Gary Wagner

The U.S. dollar drooped against the British pound and the euro today as the currency market took a breather, engaging in some profit-taking after just two days of a brutal selloff in sterling and the euro sparked by the Brexit “yea” vote.

 Nonetheless, the British pound is off 10% from the pre-vote level.

 More importantly, the euro recovered a bit. It was last up 0.15% against the dollar at $1.1038 after hitting a 3-1/2-month low of $1.0909 on Friday.

 However, the slightly weaker dollar was of no help to gold. Mostly on the back of regular trading, gold was down over $9.00 per ounce. Silver has managed for much of the day to stay in the green, rising about 5 cents per ounce.

 West Texas Intermediate crude was up around 2.50% on the day, while Brent North Sea was up just a shade less. Some temporal issues arose, including a strike by oilfield workers in Norway and anticipation of another large draw down of U.S. stockpiles this week.

Those worries helped shore up an oil market that was in in free fall after the vote by Great Britain to exit the EU. Oil had been down by as much as 8.00% after the vote. So, as you can imagine, we saw quite a bit of bargain hunting that has pushed WTI up more than 2.25%.

There is a good deal of caution in the markets during this very modest risk-on day. A good indicator of it is that yields on the U.S. 10-year bond are basically flat lining, a status made even more telling because the yield already is so low.

So, the bond market seems to be calling for low rates even though that scarcely keeps bond purchases attractive as haven plays.

The migration away from the yen and back toward other currencies is another indicator that today is a risk on day, even if one of mild potency. Essentially what we are seeing is the swinging of an unpredictable pendulum as investors and traders try to determine what the actual damage – or lack thereof – from the Brexit will be.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
Sunday we sent out a special trade alert recommending that our subscribers initiate a long gold position.
We went long gold @ 1332. Today the stop was hit @ 1313, for a loss of $19.00 or 1900 per contract)
Gold Market Forecast

Today we saw gold for the first time in a while begin to retrace and close lower on the day.

For the last couple of days it had been my belief and assumption that what we were witnessing in gold prices was simply a consolidation before moving to higher ground.

However, based upon today's lower pricing it is also quite possible that we have entered a small correction within gold's current rally.

With that in mind on today's video report we will focus on Fibonacci retracement levels that could help us determine where gold prices should find support.

Trending Markets Forecast

There were dynamic upside moves not only in the European equities markets but here in the US. Whether we look at this most recent action as a relief rally, or a change in the basic market sentiment about Brexit, one thing remains clear – today's upside move in the Dow Jones industrial average was impressive.

Yesterday when looking at the technical indicators we pointed out the fact that price action in the Dow Jones industrial average had traded to the 38% retracement and closed above it.

This information was to be tempered by the fact that the Dow Jones industrial average price point had also closed below its 200-day moving average.

The same was noted in the Standard & Poor's 500, which also traded and broke below its 200 day moving average and found support just above its 50% retracement level.

With that in mind, the question on traders' minds is whether this is signaling a potential conclusion to the dramatic selloff witnessed recently or simply a bounce before we see lower pricing. In my opinion the jury is still out. 

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