Gold Breaks Out and the Rally Continues | The Gold Forecast

Gold Breaks Out and the Rally Continues

February 23, 2017 - 5:15pm

 by Gary Wagner

taking a brief hiatus and consolidating, the major rally in gold has reignited. Today gold prices surged, trading up approximately $17, as of 3:30 Eastern Standard Time. This takes pricing to the highest level seen since November. Apparently this rally was initiated due to a weakening US dollar and a nebulous timeframe for the Fed’s next interest rate hike.

According to MarketWatch, “Fed minutes released Wednesday did not indicate any firm resolve on the part of the central bank to hike interest rates soon. The lack of clear signal from the Federal Reserve in monetary policy pressured the dollar which helped to boost appetite for dollar-denominated assets such as gold.”

On a technical note, today’s strong upside rally in gold moved prices well above our identified resistance level at $1242. This resistance level was created using a Fibonacci extension from the onset of this rally, beginning at the end of December of 2016. It culminated with a $100 price advance in mid-January. From mid-January until the beginning of February, gold prices corrected to $1180 per ounce. We are now in the second leg of this rally and based upon our current technical models, it should culminate with gold prices at least at $1280 or higher.

Risk-On and Risk-off Asset Classes Move in Tandem

As we have spoken about on many occasions, there is an intrinsic negative correlation between risk-on and risk-off asset classes. Therefore, by their nature, these asset groups will tend to run in opposite directions. However, there are times when these investment types will run in tandem, with both moving to higher ground. The greatest example of this was the quantitative easing initiated by the Federal Reserve in 2008 – 2009. Immediately following the start of QE1, both gold (risk-off) and US equities (risk-on) began one of the most substantial upside moves ever witnessed. From 2009 till the middle of 2011, both gold and equities traded to new historical highs, with gold prices roughly doubling and trading to its historical high above 1900.

In fact, the rally we are currently witnessing in US equities can be traced back to its beginning run in 2009. The fact that these asset groups are running in tandem illustrates current market sentiment. Traders are reaching for the sky (risk-on), but keeping a foot firmly planted on the ground (risk-off).

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

This morning we sent out a special trade alert through email as well as SMS text message. Gold prices have dramatically broken above 1242 resistance, now trading @ 1250 up $17 on the day. buy @ market, or wait for possible dip. We recommend buy @ market  and reserve capital to add to position on dip or first upside target.

Place stop below 1216 

Maintain your current long position at 1250 and maintain your current stop below 1216

Closed trades:

GLD: On April 12th our stop was hit at $162. We went long at 162.82. Trade resulted in 0.82 loss per share.

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

Over the last few weeks gold prices have been consolidating, trading in a narrow and defined trading range with absolute resistance at 1242. We have been waiting for gold prices to effectively close above 1242 before initiating a long position. That is precisely what we witnessed today, and as you will see a today show was the primary rationale behind today's buy signal

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