Headline’s get ahead of themselves | The Gold Forecast

Headline’s get ahead of themselves

October 22, 2020 - 8:19pm

 by Gary Wagner

In this headline driven market, sentiment can easily overreact to any news story that talks about perceived optimism, or pessimism. In regards to whether or not the United States government will be able to pass fiscal stimulus legislation prior to the presidential election on November 3rd, and traders are hanging on each and every changing headline. Today market participants witnessed choppy trading in U.S. equities resulting in gains of just over ½ a percent in both the Dow Jones industrial average and S&P 500. While the NASDAQ composite scored gains today of just under 2/10 of a percent.

Many precious metals analysts have cited today’s sharp selloff in the both gold and silver as a result of U.S. dollar strength. However, it was selling pressure that had a cascading effect which began as markets opened up for trading in Australia last night. Within the first few hours of trading overseas gold prices already had begun to decline. It began with a modest sell off in Australia, which accelerated into Hong Kong. However even though gold prices were on the way down in Asian markets they were able to hold above the key psychological level of $1900 per ounce. Selling pressure magnified as it entered London, leading to a break below $1900.

Gold futures basis the most active December Comex (Globex) contract traded to an intraday low of $1894.20 by the close of trading in London. From there pricing began to slowly recover as New York markets opened and market sentiment shifted slightly from bearish to a more bullish demeanor. This on optimism from statements made by the speaker of the House Nancy Pelosi where she acknowledged that a fiscal stimulus deal was still possible before the presidential election. That headline helped move back above $1900 per ounce.

That being said gold did close with strong losses today. As of 4:25 PM EST gold futures are currently fixed at $1906.50, which reflects today’s decline of $23.00 (-1.19%). The decline in silver was steeper as the most active December 2020 contract gave up 1.65% (-0.416).

While dollar strength did contribute to deteriorating gold and silver prices, the vast majority of today’s declines were the direct result of selling pressure. This can clearly be seen when viewing the KGX (Kitco Gold Index). On close inspection of the KGX dollar strength only accounted for $6.55 of spot gold’s losses, with the remaining decline of $12.65 directly attributable to selling pressure. The sum of these factors led to the $19.20 fall in spot gold which is currently fixed at $1905.10.

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

On October 21 we sent out a Trade Alert, and were stopped out of the gold and silver futures trade today

  • Maintain GLD at $180.46and stop at $173.50
  • Maintain SLV at $23.23 and stop at $20.33
  • Long December Gold Futures at $1925 and stop hit at $1907.30
  • Long Forex Gold at $1922 and stop hit at $1903
  • Long December Silver Futures at $25.13) and stop hit at $24.73

  • Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
    Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
    Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
    Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
    Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share
    Long December Silver (SI Z20) @ $27.07 - Stop hit @ 25.56 for a loss of $1.51 per ounce
    Long GLD @ $183.91- stop hit @ $178.50 for a loss of $5.41 per share
    Long SLV @ $ 26.33 - stop hit @ $23.53  for a loss of $2.80 per share
    Long December gold (GC Z20) @ $1947.00 - Stop hit @ $1952 for a profit of $500.00 per contract
    Long Forex gold (XAU A0-FX) @  $1939.00 - Stop hit @ $1944.80 for a profit of $5.80 per ounce
    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
    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
    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.
    NUGT – we sold all shares and took profits of $33.19 per share
    Long 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

    Although we were stopped out of our long futures trades in gold and silver, I am still extremely optimistic about the potential for both precious metals to move higher through the end of the year. The next move in gold will hinge upon two factors; first whether or not they are able to pass a stimulus bill prior to the election, and secondly the results of the presidential election

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