Dollar strength and U.S. equities under pressure are supportive of gold and silver
Considering today’s extremely strong U.S. dollar, coupled with a major decline in U.S. equities, the fact that both gold and silver are trading higher on the day is extremely impressive. Currently the dollar is up just over 0.75%, which is a net gain of 70 points, taking the dollar index to 93.425.
As of 3:48 PM EST gold futures basis the most active December contract is trading $6.70 higher, a net gain of +0.34%, and fixed at $1940.70. The most noteworthy aspect of today’s trading range was the low which occurred earlier in the trading session when gold futures traded to a low of $1911.70 before recovering. The 50-day moving average for gold futures currently resides at $1912.50. This indicates at least on a technical basis that there is solid support at the 50-day moving average. It also indicates that in terms of short-term market sentiment it remains solidly bullish as long as gold can remain above that key level of support.
Silver futures are also exhibiting moderate gains on the day. Currently the most active December 2020 contract of silver is at $26.825, which is a daily gain of about $0.12, or +0.44%. The only precious metal trading lower on the day is palladium which is currently down by 1.54% and fixed at $2,307.00.
On many occasions when U.S. equities have a meltdown like today, gold and silver prices would be dragged along with them lower. As many traders liquidate holdings to cover margin calls.
The NASDAQ composite lost -395 points (-3.49%), and is at 10,917.90, with six minutes left in trading. The S&P-500 sustained a drawdown today of -2.23%, and after factoring in a decline of just over -79 points sits at 3,347.77. The Dow Jones industrial average is down well over -2% and is presently at 27,520.98, after factoring in today’s decline of well over -600 points.
On a technical basis we currently show support for gold futures at $1,912.50 the 50-day moving average, and major support at $1,900 per ounce. Short term resistance occurs at the high achieved today, which was at $1,948.30, with the next level of resistance occurring at $1,975 per ounce, and major resistance occurring at $2,000.
Our technical studies also indicate the first level of support for silver occurs at the 23% Fibonacci retracement level at $25.66, with major support occurring at $25 per ounce. The first level of resistance in silver occurs just below $28 at $27.85.
Considering dollar strength, all the gains seen in gold and silver today are 100% due to market participants bidding the precious metals higher.
Wishing you as always, good trading and good health,
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Gold Forecast: Proper Action
Today, September 8th, we sent out a trade alert:
Buy December gold (GC Z20) current $1947.00 Stop @ $1898
Buy Forex gold (XAU A0-FX) current $1939.00 Stop @ $1883
Buy December Silver (SI Z20) Current $27.07 Stop @ $24.73
Maintain long gold and silver futures and forex trades - Maintain stops
Trades we Closed on September 2
Long December gold @ $1956.50.Stop hit @ $1960 for a profit of $350.00 per contract
Long December silver @ $27.39.Stop hit @ $27.80 for a profit of $2050 per contract
Long forex gold @ $1948.55.Stop hit @ $1955 for a profit of $6.45 per ounce
Long GLD @ $183.57.Stop hit @ $184.36 for a profit of .79 per share
Long SLV @ $25.10.Stop hit @ $25.75 for a profit of .65 per share
Trades we Closed on August 19th
Long September silver at $26.68. Our stop was hit @ $26.87 for a profit of $1000 per contract.
Long December Gold at $1955.50. Our stop was hit @ $1979 for a profit of $2350 per contract
Long Forex Gold at $1947. Our stop was hit @ $1967,52 for a profit of $20.52 per Ounce
Trades we Closed on August 11th
Long September silver at $24.40. Our stop was hit @ $25.99 for a profit of $7950 per contract
Bought GLD @ $166.74. Our stop was hit @ $$183.00 for a profit of $16.87 per share.
Bought SLV @ $18.00 Our stop was hit @ $23.80 for a profit of $5.80 per share.
Trades We Closed on August 7th
NUGT – we sold all shares and took profits of $33.19 per shareLong December gold at $1997, we covered the trade @ $2035 for a profit of $3800 per contract
Long Forex gold at $1977, we covered the trade @ $2017 for a profit of $40.00 per ounce
Gold Market Forecast
Typically, when we see a major selloff in US equities, it seems as though the safe haven asset class including gold and silver trade in sympathy to lower pricing also. Add to that extreme dollar strength and the fact that we saw both gold and silver trade moderately higher today is an extreme sign of bullish sentiment. In fact, both gold and silver had a mountain to climb to close positive against the US dollar which gained over 8/10 of a percent today.
The key and critical area we need to watch for in gold is the 50-day moving average which occurs at $1912 per ounce. As long as gold pricing is able to maintain above that price point, we should see moderate gains in both gold and silver throughout the week. On today’s video report we will detail key support and resistance levels in both gold and silver.