Fundamental Crosswinds | The Gold Forecast

Fundamental Crosswinds

August 15, 2014 - 5:33pm

 by Gary Wagner

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We entered a long position in gold at 1294.30. Last week we trailed our stop to below 1300. Today's wild gyrations in the market took gold prices to an intraday low of approximately 1292. We were therefore stopped out of our current long trade with a small profit of approximately $4.00.

We remain flat over the weekend with no open positions in gold or silver.

Gold Market Forecast

Today's dramatic price decline highlights what light liquidity and low volume can do in a market on any given trading day. Whether we see this as an exaggeration of normal price activity or a realistic sense of what traders are able to do, although gold closed well above the lows they still managed to close off about eight dollars on the day. It is my sense that no long-term technical damage is evident from this recent price decline.

Today's intraday low of 1292 was approximately a 76% retracement of the most recent rally. How the market reacts as it opens next week will determine our next move. My sense is that with this type of one-day retracement if we see real support reenter the market, and gold prices hold above $1300 per ounce, it might be wise to reenter from the long side. In any case we have the weekend to review our charts, study the data and act upon our findings on Monday morning.

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