Gold futures close moderately higher all on dollar weakness | The Gold Forecast

Gold futures close moderately higher all on dollar weakness

December 23, 2020 - 5:57pm

 by Gary Wagner

Interesting action in gold pricing today with a divergence of price between spot and futures pricing. As of 4:25 PM EST gold futures basis, the most active February 2020 Comex contract is currently up $6.70, which is a net gain of 0.34% and fixed at $1877. Dollar weakness today is the primary contributor to gains in gold futures. Currently, the dollar index is down 0.29 points which is a decline of 0.32%, and fixed at 90.255. That means that only an extremely fractional portion of today’s price gain in gold futures is attributed to buying with the remaining 98% a direct result of dollar weakness.

The same cannot be said for spot gold pricing. According to the KGX (Kitco Gold Index), spot gold is currently fixed at $1871.90 after factoring in today’s gains of $12.40. However, dollar weakness accounted for $6.50, with the remaining gains of $5.90 directly attributable to traders bidding the precious yellow metal higher.

This means that the current spread between futures and spot gold is approximately $5.10 and the differential yesterday was over $11. In both futures and spot pricing dollar weakness was a major contributor to gains, however, gains due to traders bidding gold futures pricing higher were marginal at best.

Today the U.S. Labor Department released its jobs report for the week ending on December 19. The net result was that jobless claims declined by 89,000 taking the total number of Americans on unemployment benefits to 803,000. This is a three-week low and came in well under economic forecasts. A poll by MarketWatch indicated that economists projected that the initial jobless claim would come in at 875,000 individuals.

The lowest number of Americans obtaining unemployment benefits occurred at the beginning of November and came in at 711,000. However additional furloughs and layoffs as the pandemic infection rates spiked in the United States bringing the number of individuals higher by approximately 100,000.

However, there were additional 397,511 applications filed for benefits last week through a federal relief program which puts the total number of new claims at 1.27 million. These numbers indicate the great need for an extension of the additional benefits which were set to expire the day after Christmas. This new bill which was passed yesterday has extended that timeline into the first quarter of 2021.

As more individuals become vaccinated and the country slowly returns to a new normal, we would expect the number of jobless individuals to decline and that of course would have a positive impact on the current economic contraction.

This brings us to the real issue which is the total expenditures through the Treasury Department which are now close to $4 trillion when you combine the “Cares act” and the recent financial aid package costing $908 billion. President-elect Joe Biden also acknowledged that one of his first actions after being sworn in as president will be to allocate more aid. The combination of the cost of the two financial aid bills this year and the additional aid packages that will occur during the next administration will mean that our budget deficit will swell to the highest level in history. This is why many analysts including myself believe that the dollar will continue to lose value as capital expenditures dilute the real value of the dollar. It is also a primary factor why we believe we will see gold trade to a new record high next year.

Wishing you as always, good trading and good health,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We are flat with no active positions.

Trades closed as of December 22, 2020

  • long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
  • long SLV @ $23.23 and stop hit at $23.25 for a profit of $0.02 per share

Trades closed as of December 21, 2020

  • long February Gold Futures at $1860-$1866 and stop hit at at $1869. Average profit $600 per contract
  • long XAUUSD at $1856-$1862 and stop hit at $1866. Average profit $6
  • long March Silver Futures at $25.16 - $25.25 and stop hit at $25.30. Average profit $450 per contract

long February Gold Futures at $1830 -$1843 and out at $1850 for a profit of $700 to $2000.00 per contract
long XAUUSD at $1841 and out at $1850 for a profit of $90.00 per mini 10 oz contract
long March Silver Futures at $24.29 and out @ $24.40 for a profit of $550.00 per comex contract
long GLD @ 1$71.50 and out @ $173.00 for a profit of $1.50 per share
long SLV @ $22.30 and out @ $22.50 for a profit of $0.20 per share
Long December gold at $1899. Stop hit at $1918, for a $1900 profit
Long forex gold at $1896.00. Stop hit at $1912, for a $1600 profit
Long December silver at $24.21. Stop hit at $25.07 for a $4300 profit
Long GLD at $180.46 and stop hit at $176.42 for a loss of $4.04 per share
Long SLV at $23.23 and stop at $22.78 for a loss of $0.40 per share
Long December Gold Futures at $1926 and stop hit at $1907.30 for a loss of $18.70 per ounce
Long Forex Gold at $1922 and stop hit at $1903 for a loss of $19.00 per ounce
Long December Silver Futures at $25.13 and stop hit at $24.73 for a loss of $0.40 per ounce
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

Today’s video report will focus upon our outlook for the remainder of the year, but more importantly the first quarter of 2021. Based upon our current technical studies we can confirm that the recent wave four correction occurred at the beginning of this month. It also suggests that we are in the final impulse wave; wave five. With wave three and wave for complete we can now forecast our upside target for next year and the conclusion of this final impulse wave, wave five. This presents us with a strong indication of a strong potential rally that has begun and will carry the market well beyond the former record high and create a new record high next year.

Market Overview

Economic Calendar