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Will gold prices hold above the 100-day moving average? – Part two

September 28, 2020 - 5:41pm by Gary Wagner

On Friday, September 25 we spoke about the fact that gold had plunged below its 50-day moving average one week prior. Last Thursday and Friday the intraday lows took gold pricing just above the 100-day moving average. The fact that gold prices managed to hold above this key level indicates that on a technical basis there is real support for gold at approximately $1850 per ounce.

Now for a third consecutive trading day, gold prices traded to, but not below this key indicator of intermediate market sentiment. Today’s action in both U.S. equities and gold pricing is a polar opposite of what traders observed a week ago Monday (September 21) when gold futures opened at $1957 and closed at $1910.

As of 4:40 PM EST gold futures basis, the most active December contract is currently fixed at $1886.20, after factoring in today’s gain of $19.90 (+ 1.07%). However, it is the intraday low that warrants our attention. Currently, the 100-day moving average is fixed at $1850.40, and today gold traded to a low of $1851.10 less than one dollar above that average.

Dollar weakness today provided tailwinds contributing a little under one-third of today’s advance in gold futures and spot pricing. According to the KGX (Kitco gold index), spot gold is currently fixed at $1881.10, which is a net gain of $19.90. On closer inspection dollar weakness resulted in a gain of $5.60 per ounce, and a strong buying bias resulted in a net gain of $14.30 on the day.

It is important to acknowledge two upcoming events in the United States that could have an enormous impact on gold prices this week. The first is the presidential debate which will be held tomorrow and secondly is the U.S Labor Department’s jobs report which will be released on Friday. Concurrently there are increased tensions between the United States and China, as well as a stalemate with no deal between the United Kingdom and the European Union in regards to Brexit.

These factors and events could be highly supportive of gold pricing. There is absolute uncertainty as to the outcome of tomorrow’s presidential debates. Uncertainty continues to be the fuel that could reignite gold pricing this week, and as such could take the precious yellow metal’s pricing higher.

Wishing you as always good trading and good health,

Gary S. Wagner - Executive Producer

Previous Reports:

Archived: September 1, 2020 - 6:47pm, Daily Report: September 1, 2020 - 6:47pm

Today gold futures, basis the most active December 2020 contract flirted with $2000 per ounce, when it traded to an intraday high today of $2001.20. As of 4:53 PM EDT the December contract is currently fixed at $1,977.40 which is a net decline of a $1.20. There were both positive and negative technical indicators when we look at today’s price activity, and specifically focus upon the range. Today’s... View report

Archived: August 31, 2020 - 6:43pm, Daily Report: August 31, 2020 - 6:43pm

As the last trading day of the month concludes, we can say that although gold closed slightly lower than the previous month. But that is not the whole story as the last two months have been stellar in terms of gains made in the precious yellow metal. This month gold traded to its highest price on record. On August 6th gold closed at its highest trading value ever with the futures contract closing at $2,... View report

Archived: August 28, 2020 - 7:17pm, Weekly Report: August 28, 2020 - 7:17pm

The ‘J. Powell Paradox’ is a scenario in which the Federal Reserve begins to send out signals indicating moves in the future, which are then backed up by a more comprehensive explanation of what the Fed is planning on doing, and their intent or desired result from these actions. However, market participants are not quick to react to the anticipated changes. In some cases, this creates a knee-jerk effect... View report