Bearish Sentiment Continues as Traders Await Start of the FOMC Meeting

June 12, 2017 - 5:36pm

 by Gary Wagner

With the FOMC meeting scheduled to begin tomorrow, market participants have continued the bearish market sentiment so prevalent last week. Since reaching a high just below $1300 on June 6th, gold prices have traded lower. Gold prices have continued to decline for the last four consecutive trading days.

According to the CME’s FedWatch, there is an extremely high (mid 98.96%) probability that this month’s FOMC meeting will result in an interest rate hike. In most likelihood, an interest rate hike has already been factored into the markets.

Although most analysts believe that current pricing has fully accounted for any interest rate hike, questions remain as to what the Fed will do with the 4 ½ trillion-dollar assets on their balance sheets. While it is clear that the Fed plans to begin liquidation of many of these assets, the timing and quantity of asset sales are a huge unknown.

In an interview with MarketWatch, Brian Lundin, editor of Gold Newsletter, said he believes the Fed meeting will be positive for gold, regardless of what happens.

“If the Fed raises rates as expected, it will alleviate some short-selling pressure on the metal as traders exit those positions on the news,” he said. “And if for some reason the Fed decides not to raise, it would be a significant dovish signal that would send gold even higher.”

As of 4 o’clock Eastern Standard Time, gold futures (August 2017 contract) are trading four dollars (-0.31%) lower at $1267.40 per ounce. Silver is trading under dramatic pressure, breaking below $17 per ounce today. Currently, silver futures (July 2017 contract) is at $16.93 off almost 0$.29 on the day, a net loss of 1.64%.

Noteworthy is current platinum and palladium pricing, which seem to be coming closer and closer to parity. Platinum futures closed at $944.50, up $4.20 on the day. Palladium futures surged today to close at $871.55, a net gain of $15.35 (+1.79%).

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
We are currently flat, with no active trades.  We are waiting for our next signal to enter a trade. 
We were long gold from 1264. Last Tuesday we sent out a TRADE ALERT to move Stop below 1280* 
Leg 1  Long June gold at 1225.00  Out at 1260 for a profit of $35.00 or $3500 per contract
Leg 2  Long August gold at 1264.00  Out at 1278 for a profit of $14.00 or $1400 per contract
Total Profit on trade is $4900 per contract
Gold Market Forecast

With this week's FOMC meeting scheduled to conclude on Wednesday, market participants are waiting to see if a rate hike is initiated. More importantly traders and investors will look for news as to the liquidation of the Fed's balance sheet. The fact of the matter is that it is asset liquidation which is still an unknown in terms of time and quantity parameters. As such it is Fed liquidation that could move the markets in an unforeseen manner.