Gold Continues to be Pressured by Outside Forces | The Gold Forecast

Gold Continues to be Pressured by Outside Forces

July 18, 2018 - 6:28pm

 by Gary Wagner

Although gold futures are trading slightly higher, today’s trading activity is highlighted by the fact that gold traded to a lower low and a lower high than yesterday. Currently, gold futures (August Comex contract) are trading at $1,227.80, which is a net gain of $0.50 on the day. It is the intraday low that is most noteworthy.

Traders took the precious yellow metal to $1,220.90, a new low for the year and a price point that traders have not seen since July 2017. Today’s selling pressure was once again dominated by dollar strength. In fact, it was earlier dollar strength which pressured gold pricing to this new low for 2018.

The U.S. dollar index once again tested the current resistance level which resides at 95, with the index trading to an intraday high of 95.18 before giving back those gains. Nonetheless, the dollar gained 15 points in trading today and is currently fixed at 94.855.

As of 4:15 PM Eastern standard time, physical gold is currently trading $0.30 higher on the day. This fractional increase is the net result of traders bidding gold pricing higher by $1.80, with dollar strength taking away $1.50, according to the Kitco gold index (KGX).

Dollar strength was not the only factor weighing heavily on precious metals pricing. There was also added pressure from the risk-on market sentiment created from today’s gains in U.S. equities, as well as the belief that interest is poised for more rate hikes, on a timetable of every three months.

Recent testimony by Jerome Powell laid out the current monetary policy for the Central Bank which is indicating a much more hawkish Federal Reserve in terms of the frequency of rate hikes. This is an indication that the fed plans to initiate two more interest rate hikes this year and will continue to raise interest rates every three months.

These rate hikes, if enacted as Powell suggested, will undoubtedly be a very positive factor for the U.S. dollar and almost guarantees that the dollar index will increase in value this year. As such, it will be challenging for gold pricing to advance and move to higher ground.

Even tepid economic data has not created any greater demand for gold. According to MarketWatch, “Gold prices showed little reaction in electronic trading Wednesday afternoon following the release of the Federal Reserve’s Beige Book. The snapshot of domestic economic activity found that the rapidly expanding U.S. economy is running out of room to grow any faster.”

According to Fawad Razaqzada, a technical analyst at Forex.com, “The current dispute between the U.S. and its trading partners in China, North America, and Europe has actually been a negative for gold because it means rising import costs may drive up inflationary pressures.”

Gold is, at best, fighting an uphill battle against a strong dollar and solid risk-on market sentiment.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

Yesterday I said "We are currently flat with no active trades; however, we now believe that it makes sense to initiate short positions in gold basis the October Comex contract. Aggressive traders should look to initiate short positions with a exit strategy and target of approximately 1200."

All traders should be short. Those taking the call yesterday are short August gold @ 1227.60 place your stop a 1240, or October gold @ 1232.60 place stop @ 1245

For those who did not place trade yesterday SELL gold at the market (Current August 1227, October 1231.60)

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

 Monday's price decline certainly resulted in substantial chart damage, with gold breaking below a critical level of support at 1238. That price point in most likelihood will now become resistance. That being said our new target should gold prices continued to decline, which is what we are assuming, is at approximately $1200 per ounce. That of course is based upon the lows achieved in July of last year.

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