Gold Prices Hold Steady, Waiting on the Fed

June 13, 2017 - 5:18pm

 by Gary Wagner

With great anticipation, traders and investors await the conclusion of tomorrow’s FOMC meeting. It is anticipated that the Fed will announce an interest rate hike at this time. Immediately following the conclusion of tomorrow’s meeting, Janet Yellen will hold a news conference. It is at this press conference that Chairwoman Yellen could shed some light into the current disposition of the Fed in regards to asset liquidation and the pace in which future hikes will occur.

It is this information about the Fed’s timetable for asset liquidation, as well as the future pace of rate hikes, which is of most interest to traders and investors. As such, we could see the greatest market gyrations during her news conference.

As of 4 o’clock Eastern Standard Time, gold futures (August 2017 contract) are trading virtually unchanged at $1268.70, which is a drawdown of $0.20 on the day. Physical or spot gold is currently trading at $1266.70, up approximately one dollar on the day. In most likelihood, gold prices will remain flat up until tomorrow’s conclusion of the month’s FOMC meeting.

Market participants have witnessed gold prices in a steady decline after failing to take out $1300 per ounce last week. In an interview with MarketWatch, Mark O’Byrne, the research director at GoldCore Dublin said “The metal is “vulnerable in the short term after failing to break the $1,300 level, and a retest of $1,220 low seen on May 10th is quite possible.” Fed and other central bank jaw boning and hawkish sounds frequently lead to gold weakness. There is a risk of gold weakening with the Fed, Bank of Japan and Bank of England policy meetings this week, he said. “However, this is a short-term risk and we believe that once this week is over, gold should begin to move higher again.”

However, there are significant signs that gold prices could, in fact, find price support in this area. The first factor to look at is the Fibonacci retracement of this most recent rally, as gold traded from $1213 per ounce up to $1298. The 38% retracement of that rally falls at 1266, which is below current pricing. The second factor to look at on a technical basis is the fact that gold prices are well above their 50 and 200-day moving average. Currently, the 50-day moving average is at $1261.20 which corresponds to today’s intraday low of $1260.50.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
We are currently flat, with no active trades.  We are waiting for our next signal to enter a trade. 
We were long gold from 1264. Last Tuesday we sent out a TRADE ALERT to move Stop below 1280* 
Leg 1  Long June gold at 1225.00  Out at 1260 for a profit of $35.00 or $3500 per contract
Leg 2  Long August gold at 1264.00  Out at 1278 for a profit of $14.00 or $1400 per contract
Total Profit on trade is $4900 per contract
Gold Market Forecast

Assuming that no major political or geopolitical event occurs in the next 24 hours I am assuming that gold prices will remain flat as we go into the conclusion of the FOMC meeting tomorrow. What could moved the needle would be statements made by Janet Yellen during her news conference that is out of the realm of currently known statements made by the Fed. Any new revelation conveyed during the news conference tomorrow could in fact greatly influence market sentiment.