COVID-19 continues to ravage the global economy
As of 5:07 PM EST gold futures basis the most active April contract is currently trading up $6.10 (+0.37%) and fixed at $1639.50. Although gold opened slightly above yesterday’s close, today’s close was below today’s opening price. Also noteworthy is gold continues to have an exaggerated price range, as today’s pricing created a lower low, and a lower high, when compared to yesterday’s price action. Gold traded to a low of $1611 and a high of $1672.50 today.
However, the real picture is not the move in gold, but rather incredible U.S. dollar weakness which is a direct result of this morning’s weekly jobless claims report which indicated an enormous rise of 3.2 million claims. Currently the dollar is down 1.48% which is equivalent to 1.492 points taking the index below 100 and is currently fixed at 99.505.
According to Reuters, “The dollar dropped broadly on Thursday after an unprecedented rise in jobless claims led investors to anticipate that the U.S. government and Federal Reserve would take new steps to stimulate the economy. The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the coronavirus pandemic brought the country to a sudden halt, unleashing a wave of layoffs that likely ended the longest employment boom in U.S. history.”
After the release of today’s unemployment claims the Federal Reserve Chairman Jerome Powell said that the United States “may well be in recession” but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen. This statement by the Fed Chairman was rare because his statement came before he had data to support that assumption.
However, one fact is absolutely clear, the effects of the COVID-19 (coronavirus) continue to negatively impact the global economy, as the virus continues to affect more individuals globally raising the number of infected individuals as well as the number of deaths tied to this virus. This is the leading to a major contraction of global GDP. Most alarming is the fact that most medical experts predict this pandemic will get worse before it begins to diminish.
That fact has caused central banks worldwide including the Federal Reserve to take emergency actions. It is also why the Senate passed a $2.2 trillion financial aid package for businesses and individuals residing in the United States. The financial aid package still needs to be voted and approved by the House of Representatives, and then signed off by the president of the United States before it becomes enacted.
Wishing you as always, good trading,
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Gold Forecast: Proper Action
We are currently flat after pulling profits yesterday when our stop was hit.
On Monday, March 23rd we sent out a Trade alert to buy April gold at the market ($1570.10) and place your stop at $1501.We raised our stop to $1613, which was hit when the market hit a low of $1611.
In at $1571 - Out at $1613 for a profit of $4200 per Comex Contract.
Gold Market Forecast
While market sentiment was definitively bearish today in gold as market participants moved the precious yellow metal lower, dollar weakness more than overcame any decline from selling to cause gold prices to close in the positive. While I am still expecting gold to run to $1700 and above, we might see a deeper decline than what we witness today when market forces took gold futures to an intraday low of $1611 per ounce. It is for that reason that we will remain flat with no active trades while we see how gold reacts over the next few trading days.