Gold Rises In Face Of Impressive Jobs Report

July 8, 2016 - 5:08pm

 by Gary Wagner

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
We will enter the weekend flat with no active trades.
 
Last Friday we sent out a special trade alert recommending the initiation of a long position in gold. Traders taking that call bought gold at 1338 (basis August Comex contract).
 
Yesterday we are issued a TRADE ALERT to either
1. Raise your stop to below 1352 (for a $14.00 profit or $1400 per contract) or
2. Take price order to the market (for a $24.00 profit or $2400 per contract)
 
Gold Market Forecast

What in incredible roller coaster ride of a day for precious metals traders. Immediately following the release of last month's jobs report, which came in as better than expected, we witnessed precious metals succumb to great selling pressure, with gold trading to an intraday low of 1332 per ounce.

This selling pressure was to be extremely short-lived, with a tremendous recovery in which we saw lost ground made up, and precious metals as a complex close in positive territory on the day.

Most interesting is that we had a risk-on day with US equities flirting with historical highs in the Standard & Poor's 500, and yet had a safe-haven play with precious metals closing moderately higher after trading under tremendous pressure at the onset of today's trading.

Gold has still not broken above 1371 on a closing basis, the area we have been looking at as a potential point for resistance. That being said, next week will give us some key indications as to our next move. Should the market simply fly through 1371 and move to higher ground we would expect gold prices to trade as high as 1400 per ounce.

Should we see some softening in gold prices at the beginning of the week we would then look for a small consolidation or correction before returning to rally mode.

Trending Markets Forecast

Rarely do we see markets trade in such a manner. With a solid jobs report it was no surprise to see US equities trade higher on the day.

However, it was interesting to see the dynamics of today's trading range and the fact that the Standard & Poor's 500 closed within just a few points of its all-time historical high.

At this point, US equities have gained back all of the losses incurred when the United Kingdom referendum to leave the European Union was approved. So, roughly $2 trillion which eroded in real value has now gone back into the pockets of investors and traders.

There is still much uncertainty as to what will happen in the European Union with the Brexit vote. However, one thing is absolutely clear and that is that given all of the circumstances globally, US equities are still the most desired of any of the risk-on income investments. We also believe that the central banks will continue to add stimulus in Europe, with our Federal Reserve keeping interest rates steady with no imminent rate increases.

Sentiment Indicator: