Gold is up on the month but down over $50 on the week
Gold futures declined over $19 today, with the most active contract (June 2020) breaking below a key support level at $1700, and is currently fixed at $1693.90 However, even with the declines that have occurred this week gold pricing still gained 6% this month.
Lower gold prices were curtailed somewhat by dollar weakness. The U.S. dollar index is currently fixed at 99.015 and is showing a net decline of – 0.63% in trading today. Dollar weakness today took the index below its 50-day moving average, a key indicator analyst used to determine the short-term trend of a stock, commodity or index.
Spot gold sold off even harder currently fixed at $1684.80, after factoring in today’s decline of approximately $29. According to the KGX (Kitco Gold Index) selling pressure took gold pricing down $38, however dollar weakness softened that decline by $8.70, resulting in today’s decline of $29.30.
Today’s weekly jobless claims came in at 3.84 million new unemployment claims, slightly above economists’ estimates of 3.5 million indicating that the economy continues to contract.
According to Tyler Richey, co-editor at Sevens Report Research, and reported in MarketWatch, traders moved to “square their books into the end of the month,”
Statements made by both the Federal Reserve and the ECB (European Central Bank) indicated that both entities will continue to take emergency steps to help curb a contracting GDP in the United States as well as the eurozone. The Fed announced that they will leave federal funds-rates at near zero, and reiterated that it will continue to use all and any policy tools available to them. The ECB allocated €750 billion for a Pandemic Emergency Purchase Program, and also left their interest rates unchanged.
On a technical basis gold broke through two key levels of support today as it traded to lower pricing. First gold futures traded and closed below the key psychological level of $1700 per ounce. Secondly it broke below the 21-day exponential moving average which is currently fixed at $1699. While pricing is still above the 50-day moving average, which is currently fixed at $1648.50, this week’s sharp decline of over $50 is bewildering.
Currently we show the next level of support at $1681.80, which is the 50% retracement of the most recent rally which began at $1580 and concluded at $1788. Below that is the next level of support occurs at $1660 which corresponds to the 38% Fibonacci retracement of a larger data set beginning on March 16th when gold was trading at $1451 per ounce, and concludes at this year’s high of $1788.
Wishing you as always good trading and good health,
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Gold Forecast: Proper Action
We are currently flat with no active trade in gold or silver.
Our Last Trade:
This morning we were stopped out of our trade.
We went long June gold @ $1728.20, our Stop was hit at @ $1698 for a loss of $3200 per Comex contract
The trade before that:
We sent out a Trade alert on Monday April 20th to buy june gold @ $1614.
We were stopped out at $1680 for a loss of $35.00 or $3500 per Comex Contract
The trade before that:
We went long gold at $1602 with a stop a $1737 (we sent out a trade alert on Tuesday April 14th).
We went long at $1602 and out at $1737 for a profit of $$135 per ounce. Each comex contract returned a profit of $13,500.00
The trade before that:
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
Although the week is not over, and in this volatile market anything can happen, pricing has sold off approximately $50 on the week. The only thing I can say about recent activity regarding gold prices is there is an absolute disconnect between the fundamentals currently at play and gold’s price decline this week.
While I am still extremely bullish on gold overall, this week action is been a real indication about the volatility and instability of pricing. The fact that gold is declined by $50 in the last four trading days while we have a global economic contraction, and unprecedented reaction by the Federal Reserve and the ECB to have almost unlimited quantitative easing as their current monetary policy. Simply put the to do not go hand-in-hand.