Gold gives up earlier gains due to U.S. dollar strength | The Gold Forecast

Gold gives up earlier gains due to U.S. dollar strength

September 10, 2020 - 7:11pm

 by Gary Wagner

In trading overseas gold prices managed to reap moderate gains as dollar weakness and interest by market participants in the safe-haven asset moved the precious yellow metal higher. In fact, gold futures basis the most active December 2020 Comex contract traded to an intraday high of $1975.20 before retreating. If gold had held on to earlier gains it would have marked the third consecutive day in which gold prices moved higher.

As of 4:45 PM EST, the U.S. dollar index is up approximately 13 points (+0.14%) and fixed at 93.39. This reversal from weakness to strength in the U.S. dollar eroded much of the gains witnessed earlier in gold pricing. Currently, gold futures are trading at $1954.60 which is a net decline of $0.30 on the day.

Statements made by Christine Lagarde; the ECB’s president had the net effect of taking the U.S. dollar from negative territory to positive gains on the day. The ECB President said, “there is no need to overreact to euro gains”.

The ECB’s Governing Council meeting held on Thursday reiterated that it will maintain its currently scheduled €1.35 trillion plan of quantitative easing to support the contracting economy directly related to the pandemic.

According to Ambrose Evans-Pritchard, a reporter for The Telegraph, “The ECB has other problems. It suddenly faces a systemic policy broadside from the US Federal Reserve, which has shaken up the world of central banking with a new regime of flexible inflation targeting - academic jargon for looser money and a greater willingness to ‘run the economy hot’ in order to boost jobs.”

According to Yahoo finance, “The European Central Bank has dashed hopes of fresh stimulus to buttress the faltering recovery and to restrain the surging euro, sending the single currency rocketing higher against sterling, the dollar, and the yuan.”

According to Reuters recent data suggests that there is still a large number of Americans who lost gainful employment during the pandemic and continue to require unemployment insurance. For the week ending on September 5 claims for state unemployment benefits remained at a seasonally adjusted 884,000, this according to the United States Labor Department. This number reflects an additional 93,000 individuals receiving benefits.

“All told, some 29.6 million Americans were relying on some form of unemployment insurance as of Aug. 22. That figure equates to a little under a fifth of the total number of jobs supported by the U.S. economy in February, before the current economic crisis hit.”

While it is clear that there has been a gradual recovery for the U.S. economy, it is also apparent that the recovery has been much slower than many had hoped for.

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 Tuesday September 8th, we sent out a trade alert:

Buy December gold (GC Z20) current $1947.00 Stop @ $1898
Buy Forex gold (XAU A0-FX) current $1939.00 Stop @ $1883
Buy December Silver (SI Z20) Current $27.07 Stop @ $24.73

Maintain long gold and silver futures and forex trades - Maintain stops

Trades we Closed on September 2

Long December gold @ $1956.50.Stop hit @ $1960 for a profit of $350.00 per contract
Long December silver @ $27.39.Stop hit @ $27.80 for a profit of $2050 per contract
Long forex gold @ $1948.55.Stop hit @ $1955 for a profit of $6.45 per ounce
Long GLD @ $183.57.Stop hit @ $184.36 for a profit of .79 per share
Long SLV @ $25.10.Stop hit @ $25.75  for a profit of .65 per share

Trades we Closed on August 19th

Long September silver at $26.68. Our stop was hit @ $26.87 for a profit of $1000 per contract.
Long December Gold at $1955.50. Our stop was hit @ $1979 for a profit of $2350 per contract
Long Forex Gold at $1947. Our stop was hit @ $1967,52 for a profit of $20.52 per Ounce

Trades we Closed on August 11th

Long September silver at $24.40. Our stop was hit @ $25.99 for a profit of $7950 per contract
Bought  GLD @ $166.74. Our stop was hit @ $$183.00 for a profit of $16.87 per share.
Bought SLV @ $18.00  Our stop was hit @ $23.80 for a profit of $5.80 per share.

Trades We Closed on August 7th

NUGT – we sold all shares and took profits of $33.19 per shareLong December gold at $1997, we covered the trade @ $2035 for a profit of $3800 per contract
Long Forex gold at $1977, we covered the trade @ $2017 for a profit of $40.00 per ounce

Gold Market Forecast

While we acknowledge that recent activity in regards to gold pricing have shown a market in consolidation training in a defined and narrow range, there is important information that we are able to glean from this recent activity. The former level of resistance which was the all-time highs achieved in the middle of 2011, has now become a potential strong support level. Secondly, we know that there is substantial resistance at the recent and new record all-time high of $2088 per ounce.

On today’s video report we will look at these price points and use them to formulate a couple of different models as to where gold prices might be headed both short-term and long-term.

Market Overview

Economic Calendar