Back to the basics; strong dollar and stable Treasury yields take gold lower | The Gold Forecast

Back to the basics; strong dollar and stable Treasury yields take gold lower

March 25, 2021 - 6:29pm

 by Gary Wagner

There have been numerous factors that have pressured both gold and silver pricing lower. A strong U.S. equities markets which hit numerous all-time highs over the last six months and Bitcoin’s rising value being prevalent as causes for both gold and silver pricing to trade under pressure. However, it has been dollar strength, coupled with the recent rise in yields of U.S. Treasury 10-year notes that have been the most recent factors pressuring the safe-haven asset class.

According to Reuters, “Gold fell on Thursday as U.S. Treasury yields nudged up and the dollar hit a four-month high, denting the non-yielding metal’s appeal.”

As of 5 PM EST, the dollar is trading approximately 0.4% higher, with the dollar index currently up 0.355 points and fixed at 92.885. The last time the U.S. dollar traded at this value was the last week of October 2020, before dropping in November 2020. The dollar fell until the beginning of 2021, when it hit an intro week low just above 89.20.

The 10-year Treasury notes have been rising since the first week of March when yields were just above 1.4%. Currently, the yield on the 10-year notes is fixed at 1.614%. Both a strong dollar and higher yields are occurring concurrently with stronger U.S. equities markets which had modest gains in trading today. The Dow Jones industrial average gained 199.42 points, or +0.62%, and is currently fixed at 32,619.48. Both the NASDAQ Composite and S&P 500 closed fractionally higher on the day. Collectively these three factors, dollar strength, higher yields, and strong U.S. equities, have contributed to pressuring both gold and silver pricing lower.

Today’s price action in gold certainly contained some intrinsic volatility. After opening at $1733.20, it sank to a low of $1720.30 and then quickly moved to its intraday high today of $1744.80 before once again trading under pressure. As of 5 PM EST, the most active April 2021 Comex contract was trading down by $7.80 (-0.45%) and fixed at $1725.40. Silver also closed in New York with a loss of approximately 0.4%. The most active May 2021 Comex contract is currently fixed at $25.14.

On a technical basis, gold remains bearish. After hitting a low during the second week of March at approximately $1670, gold prices climbed to $1750 before consolidating and moving sideways and slightly lower. The three major moving averages are in complete bearish alignment.

This means that the 200-day moving average is at the highest value currently at $1859.70. The 100-day moving average comes in just below that price point at $1827.20, with the short-term 50-day moving average currently fixed at $1785.20. More alarming is they are once again beginning to show signs of divergence as the respective moving averages move farther away from each other in price. Currently, our technical studies indicate that there is major resistance in gold at $1768.80, which corresponds to a 50% retracement of the rally that began in mid-March 2020 when gold was trading at $1450 to the new record high achieved in August at $2088. Gold prices would have to move above $1768 before we had solid technical confirmation that the bulls have begun to regain control of price action. There is solid support for gold at $1680  to $1700.

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

We are flat, with no active trades after taking profit on our long gold positions.

Futures: Gold (GC J21) in at 1722.80. Out at at $1728 for a profit of $520.00- per Comex contract.

Forex: XAUUSD in at 1724.40. Out at at $1729 for a profit of $4.60- per ounce.

ETF's: GLD in at 161.55. Out at at $161.90 for a profit of $0.35- per share


SLV in at $24.24. Stop hit at $23.50, for a loss of $1.05 per share
May 2021 (SI K21) in at $26.26. Stop hit at $25.3 for a loss of $0.96 ounce
Forex silver in at $26.17. Stop hit at $25,30 or a loss of $0.87 per ounce

On February 18 we entered a long April Platinum trade. In at $1282. Our stop was hit today (02/26/21) @ at $1217.00
SILVER FUTURES MARCH: Entry at $27.36, and then closed the trade later @ $27.45.
XAGUSD: Entry at $27.26,, our stop was hit at $27.39

We closed our positions in SLV:
First leg SLV: @ 22.95 .out at @ $24.99
Second leg SLV @ 24.60. out at @ $24.99

On Thursday February 4 stops were hit on our long GLD ETF. We entered at 172.14. Our stop was hit at $168.29 (the open on Thursday) for a $3.85 loss per share.

GOLD FUTURES APRIL: Entry at 1845 - 1859 . Stop hit at 1813 - average loss $3900 per contract
XAUSUD: Entry at 1845 - 1857 . Stop hit at 1813 - average loss of $38 per oz
SILVER FUTURES MARCH: Entry at 25.42 - 25.46 . Stop hit at 24.11 - average loss $6650 per contract
XAGUSD: Entry at 25.33 - 25.40 - Stop hit at 24.11 - average loss $1.3 per oz
long February gold @ $1890.00 and stop hit @ $1902.20, for a profit of $1202.00 per contract
long Forex gold @ $1886.00 and stop hit @ $1898 for a profit of $12.00 per OZ
long March silver @ $26.31 and stop hit @ $26.41 for a profit of $500.00 per contract
long GLD @ $177.26 and stop hit @ $178.00 for a profit of $0.71 per share
long SLV @ $24.67 and stop hit @ 25.00 for a profit of $0.33 per share
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 GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
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

Gold Market Forecast

After hitting a low just below $1700 per ounce and then pivoting with a V key reversal, it seemed appropriate to enter gold positions from the long side. Gold prices did move higher but ran into real resistance at approximately $1730-$1740 which gave us a strong technical indication that gold might have an issue moving above that price point.

The recent action and technical studies prompted us to raise our stops and take a small profit on all of her gold trades today. That being said today’s video report will detail each trade, but more importantly address where gold prices need to move to to the upside if we are to regain any bullish disposition, or where gold would have to go to the downside to indicate further selling pressure. For now we remain flat with no active trades.

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