Gold and Equities Fall as the US Dollar Gains Value

December 22, 2016 - 5:20pm

 by Gary Wagner

In extremely light preholiday trading, both gold and equities traded modestly lower. All the while, the US dollar continued to show strength and gain value. As of 3 o’clock EST, the Dow Jones is lower by 22 points (.11 %) at 19,920. Spot gold is currently trading at $1,129.25, a net loss of about $2.00 (-.19%) per ounce.

Three Equals Two X Two

Over the last three days, we have seen the Dow trade within mere points of the 20,000-milestone mark on two separate occasions, followed by two consecutive days in which the Dow closed lower. This is the first occurrence of two consecutive down days in the Dow since the presidential election was held last month.

Coming within just a few points of 20,000, the Dow has now flirted with this elusive milestone twice this week. On Tuesday, the Dow traded to a new, all-time high at 19,997, settling slightly lower, but still closing at an all-time record close of 19,975. Yesterday’s trading activity took the Dow to an intraday high, roughly equal to the highs achieved on Tuesday. However, the Dow parred its gains, closing lower on the day at roughly 19,940.

Silver Loses More Luster Than Gold

Over the last two trading days, both gold and silver have traded under pressure, losing value. However, silver’s value has declined by three times as much as gold’s, based upon the percentage loss.

Although the entire precious metals complex traded, under pressure, with lower closes over the last two days, on a percentage basis, silver has lost more value than gold. Both yesterday, as well as today, silver lost approximately .75 %, taking prices approximately 1 ½% lower. Gold also has traded lower for the last two days, but each day only giving up approximately. 2/10 of a percent.

The Exit Door is on the Right

Both gold and equities traded lower over the last two days, as the US dollar continues to hold and gain value. The underlying, predominant influence continues to be the squaring of positions as traders prepare for the upcoming holiday season. Lackluster and quiet at best describes current market sentiment as many traders begin to exit early for this weekend’s Christmas and Hanukkah celebrations.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Gold Forecast: Proper Action
We are currently flat with no active trades in gold or silver on record.
 
However, we have been strongly bearish over the last month.
 
Last week we laid out our current trading strategy, and traders who want to maintain active positions over the holidays have implemented short positions in gold. Be Aware that gold prices are close to our target of 1123 to 1113, look to pull profits, if short.
Gold Market Forecast

Although there is still dramatic downside pressure in the precious metals, recent activity has demonstrated that even though this trend is still intact it appears to be losing momentum. When added to the fact that this most recent selloff in gold has taken prices closer and closer to the target price point we believe gold pricing could find support at.

The third factor to take into account is that we are genuinely in light and quiet pre-holiday trading mode. As such barring, any unforeseen geopolitical flare-up we should see quiet downside pressure continue through the remainder of the year.

Trending Markets Forecast

The US dollar continues to rage like a bull, scratching its hooves on the floor, ready to charge.

This dynamic stance has been an outside influence on both US equities and the precious metals complex.

As such we saw the Dow Jones industrial average lose about 22 points on the day with gold trading off about three dollars.