Gold and Other Investments Silent
What is there to say when equities are struggling to find direction, oil is down, the U.S. dollar is flat, U.S. Treasury yields are down on the 10-year, and it’s Friday?
The simplest thing to say is that investors, analysts and traders don’t know what’s going on in the economic and business world and have pulled off for a pit stop for a tire change and refueling. Heading into a weekend seems the ideal time.
In a piece of unfortunate timing, Chairwoman Janet Yellen of the Federal Reserve is slated to speak in San Francisco beginning just 15 minutes before the closing bell on Wall Street.
It could make for a volatile close, or a crazy opening on Monday, if she says something out of line with comments and the news release from March’s FOMC meeting.
We think the chances of Yellen doing so are slim to none. Every single thing has been said by the Fed, directly and indirectly, but anytime it is said again, it tends to cause some sort of reaction.
We feel there are other issues bothering equities, although it is hard to ascertain how those might affect gold in the near term.
U.S. consumer sentiment fell month-over-month in March, a survey showed that was released today, though the decline was smaller than forecast.
The final reading on U.S. GDP for Q4 of 2014 was unchanged from the previous forecast indicating a 2.2 percent rate of expansion. After-tax corporate profits fell at a 1.6% rate in the fourth quarter. The last statistic can be blamed squarely on the rising dollar.
Very soon we will be hearing a lot of squawking and wailing from Wall Street on the threat higher interest rates would pose. That will get even the attention of Fed hawks.
Like the old retail days on the streets of big cities, there was such a thing as “Lookers Days,” when everyone was looking and no one buying. That’s our day, regardless of the kind of investment on the market.
UPDATE: Chairwoman Yellen has said the Fed may very well raise rates later this year.
“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year,” she stated in prepared remarks at a monetary policy conference at the Federal Reserve Bank of San Francisco.
She also said, “The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation.”
Wishing you as always, good trading,
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Gold Forecast: Proper Action
Last Thursday we sent out a special trade alert: "Buy Gold @ market Buy silver @ market”
On Friday (March 20) we outlined a strategy for exiting our long gold trade on an OCO order.
Yesterday we issued a "Trade Alert" to raise stop for those who did not implement the OCO strategy.
In either case you pulled profits on the gold trade. Stop was not hit in silver and it is still an active trade.
Long gold @ 1170 out @ 1218 (oco) or 1194 (stop only) +$4800 or + $2400 per contract
Maintain long silver @ 16.13 Maintain stop @ 16.80
Gold Market Forecast
Our underlying assumption this week is that we would see higher pricing in both gold and silver. In both precious metals markets we maintained long positions. On Friday of last week we suggested an alternative strategy for exiting our current gold trade. It involved trailing stops and the implementation of an OCO (one cancels the other) order.
This strategy was based upon our initial exit strategy and upside target. It was our belief then, as it is now, that gold had the ability to rise as high as approximately 1220 per ounce. This was based upon our Fibonacci retracement studies as well as trend analysis of support resistance areas.
This strategy will be detailed on today’s video report, in which we will revisit last week’s report and analyze how effective our upside target was and the difference found within the two strategies we outlined.
As far as next week is concerned we could see a little bit of profit taking and backfilling in both gold and silver, but look to the U.S. dollar for insight regarding where we will see both gold and silver go. Once again I believe gold and silver prices next week will be heavily influenced by dollar strength or weakness.