Gold and U.S. equities continue to run in tandem, but to the downside today | The Gold Forecast

Gold and U.S. equities continue to run in tandem, but to the downside today

May 21, 2020 - 6:50pm

 by Gary Wagner

After trading higher for six of the last seven trading days, gold futures closed sharply lower on the day. After trading to a low today of $1715.30, gold recovered approximately 1/3 of today’s drawdown and is currently fixed at $1726.70 (-1.45%), ending up with a loss $25.40.

All of the other precious metals that trade on the futures exchange were lower on the day. Platinum declined the greatest, the precious white metal gave up $67.60, which is a decline of 7.23%, resulting in platinum futures currently fixed at $866.90. Palladium futures came in second in terms of percentage drawdown. Today palladium lost 4.19%, a total drawdown of $90.40, and is currently fixed at $2069. Following palladium is silver which gave up 3.25%, a total drawdown of approximately $0.59 and is currently fixed at $17.445.

Today’s dynamic selloff in the precious metals was partially due to dollar strength. However, it was only minimal when compared to the total percentage decline of each precious metal. The dollar index traded 0.27% higher and is currently fixed at 99.40.

Spot gold is a perfect example of the minimal effect that a stronger dollar had today. According to the KGX (Kitco gold index) physical gold is currently fixed at $1727.50. Today’s decline totals $20.90 of which $16.70 is directly attributable to traders selling the precious yellow metal. Dollar strength accounted for the additional drawdown of just $4.20.

It is noteworthy that both precious metals as well as the U.S. equities markets moved in tandem again, but in today’s case they both moved in tandem to lower pricing. While the typical correlation between these two asset classes is a negative correlation, there are instances when both equities and gold move in tandem to the upside.

This occurred in 2008 when the Federal Reserve began to speak about quantitative easing, and continued throughout the middle of 2011 as both gold and silver both moved higher. In a similar manner we have seen both equities and gold run in tandem after the Federal Reserve began its more accommodative stance and reignited quantitative easing, after lowering their interest rates to near zero.

Today U.S. economic data on the number of Americans that applied for unemployment totaled 4.4 million, however on an adjusted basis first time unemployment insurance filing totaled 2.44 million. While this number is extremely unsettling

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

On Thursday, May 14th we sent out a trade alert to BUY june 2020 Gold (entry price = $1743.20), and place your stop at 1715
If you trade XAUUSD you bought spot @ $1731 with a stop at $1708

Maintain long gold and stop


Our Last Trade:

Thursday  May 7th we set out a trade alert to Buy June gold @ the market ($1724.10. However I spoke to aggresive and conservative traders with different parameters. Today we were stopped put of our traderthe specifics.

Long long gold at $1724. Stopped out @ $ 1701for a loss of $2300 per comex contract

The trade before that:

On Thursday April 30  we were stopped out of our trade.

We went  long June gold @ $1728.20, our Stop was hit at  @ $1698 for a loss of $3020 per Comex contract

The trade before that:

We sent out a Trade alert on Monday April 20th to buy june gold @ $1614.

We were stopped out at $1680 for a loss of $35.00 or $3500 per Comex Contract

The trade before that:

We went long gold at $1602 with a stop a $1737 (we sent out a trade alert on Tuesday April 14th).

We went long at $1602 and out at $1737 for a profit of $$135 per ounce. Each comex contract returned a profit of $13,500.00

The trade before that:

On Monday, March 23rd we sent out a Trade alert to buy April gold at the market ($1570.10) and place your stop at $1501.We raised our stop to $1613, which was hit when the market hit a low of $1611.

In at $1571 - Out at $1613 for a profit of $4200 per Comex Contract

Gold Market Forecast

Although gold traded sharply lower today it did miss our stops in both the futures and Forex markets. We are not out of the woods yet, even though gold has recovered from those lows and is now trading approximately eight dollars off of today’s lows.

With that in mind one suggestion that I am not adding as a trade alert because it is only geared towards extremely aggressive traders, is if we see follow-through buying today, or in the evening session you might consider not only adding to your gold position but taking a long position and silver as well. We will speak about this fact on tomorrow’s video report and weekend review.

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