Gold futures selloff strongly as it closes below spot gold | The Gold Forecast

Gold futures selloff strongly as it closes below spot gold

May 26, 2020 - 6:21pm

 by Gary Wagner

Gold futures basis the June 2020 Comex contract closed down $30.50 (-1.76%), and is currently fixed at $1705.10. The June contract traded to a low of $1700 before recovering slightly. At the same time spot gold is currently trading down $17.30 and fixed at $1710.30.

Today’s lower pricing has created an inversion between gold futures (the June contract) and spot pricing, with spot above the futures contract prices. This selloff occurred with strong tailwinds provided by dollar weakness. According to KGX (Kitco Gold Index) spot gold actually sold off by $32.85. However, after factoring in a gain of $15.55 directly attributable to dollar weakness selling in gold as well as all the other precious metals was limited due to a weak dollar.

All of the precious metals traded lower on the day. A large component of today’s lack of safe haven allure was the strength of U.S. equities which traded strongly higher. According to MarketWatch, “Gold futures ended lower on Tuesday as global equities rallied, in response to the lifting of business lockdowns as the coronavirus pandemic recedes, along with encouraging reports of progress toward a COVID-19 vaccine, dulling the yellow metal’s haven appeal.”

The S&P 500 traded to a high of 3021 before closing just below 3000 at 2991.77, resulting in a net gain of 1.23% today. The Dow Jones industrial average gained over 500 points (+529.95) closing just shy of 25,000 points and gaining 2.17% today. This is the highest-level U.S. equities have traded to since the pandemic began reached America in mid-March. This caused investors to re-focus on positive signs and optimism as restrictions were eased in the United States.

Based on our technical studies, gold futures broke below critical levels. First the 23.6% Fibonacci retracement level at $1709.40. More importantly breaking below the support trendline based upon the previous lows since the middle of April to current pricing.

Although it is noteworthy that gold futures held above the key psychological level of $1700, and in fact that was the intraday low. However, if this level does not hold the next support level does not occur until $1660 per ounce, the 38.2% Fibonacci retracement level. The Fibonacci levels cited above are based upon data set which begins mid-March when gold traded at $1450 per ounce, up to this year’s high at $1788.

Wishing you as always good trading and good health,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

We are currently flat with no active trades.

On Thursday, May 14th we sent out a trade alert to BUY june 2020 Gold was at  $1743.2, and our stop was hit today, May 22  @ 1715, for a loss of $28.20 per oz

Our Last Trade:

Thursday  May 7th we set out a trade alert to Buy June gold @ the market ($1724.10. However I spoke to aggresive and conservative traders with different parameters. Today we were stopped put of our traderthe specifics.

Long long gold at $1724. Stopped out @ $ 1701for a loss of $2300 per comex contract

The trade before that:

On Thursday April 30  we were stopped out of our trade.

We went  long June gold @ $1728.20, our Stop was hit at  @ $1698 for a loss of $3020 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

Today’s price drop in gold futures of over $30 per ounce is significant and did cause technical chart damage.

On today’s video report we will detail the technical levels that gold broke through, as well as possible areas where the decline could find support.

Market Overview

Economic Calendar