Gold Prices Struggle to Find Support Levels

June 11, 2019 - 6:17pm

 by Gary Wagner

Gold is trading fractionally higher today, with the most active futures contract (August 2019) currently bid up by $1.40, this as of 5 PM Eastern daylight Time. However what is most impressive about today’s move was the fact that gold closed very much off of the lows achieved today which came in at $1323.60.

With the recent moderate decline which began overseas, Monday morning in Australia, today’s lower low and price recovery indicate that traders and market participants are looking at various price points to see if there’s potential price support.

Sunday – Mondays selloff was largely attributed to 1/11 hour deal between the United States and Mexico which averted the initiation of a 5% tariff on Mexican imports to the United States. While this event certainly lessen the overall tension due to the conflict between the United States and its trading partner. However there is still the big 800 pound elephant in the room-China.

Without the two superpowers reigniting some genuine negotiation skills and compromises on both sides the stalemate that has been evident over the last month will continue at this level or even deepen. The facts remain that without a viable resolution which benefits both sides the global economic repercussions will continue to be felt and in fact deepen. That being said although the deal made by Mexico on the United States carry significant importance it is but a small fish in a deep sea of trade war discontent.

One significant factor that we have noticed this week was the decoupling of the tandem run that characterized both gold and US equity price movement. Is quite possible that US equity traders felt that the deal reached by Mexico on the United States would certainly benefit US equities and not have that same underlying force to support Gold prices.

The common ground that equities and gold have right now is that there both moving in the same direction based upon the belief that the Federal Reserve will implement a number of rate cuts this year.

With the jobs report already complete it is the G 20 meeting being held later on this month in Osaka Japan that traders and investors and market participants will observe closely to gain any insight and information as to where this current conflict is headed.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
We are currently flat after taking profits yesterday. On opening weaknees, when gold was down $8.00, we took our stop to the market.. Long @ $1293.10 Out @ $1338.10 =  $45.00 per ounce, or $4500 per contract.
 
Thursday morning, May 30, we sent out this message -Trade Alert: buy August 2019 gold @ the market. Respectable move today in gold which is currently trading up $6.80 to $7.00, basis the August 2019 contract and fixed at $1293.10.
Gold Market Forecast
We remain bullish for gold on a long-term basis, however Sundaywe got the short term pause in this rally we have been waiting for..  
 
Support for gold continues to be  attributed to statements by Federal Reserve Chairman Jerome Powell who alluded to the potential for rate reductions this year to continue the economic expansion. This coupled with last  Monday's statement by the president of the St. Louis Federal Reserve Bank, James Bullard is significant in that it illustrates real support for rate cuts if needed. Last weeks Labor department Jobs report came in well under exceptions. 175,000 new jobs were forecast and the actual number was only 75,000, are supportive of rate cuts.
Sentiment Indicator:
Gold -> Neutral
Silver -> Bearish
S&P 500 -> Neutral
Bitcoin -> Bullish
Bitcoin fundamentals by Joseph M. Wagner II:

As we spoke about a few weeks prior Tether (USDT) a stablecoin fixed directly to the value of the U.S. dollar has held the record for daily trading volume for some time now and it is widely accepted that Tether’s Market cap has correlated to the price of Bitcoin. Recently it has been noticed that any spike in Tether’s market cap will bring about an upward spike in BTC pricing approximately one month after the spike in USDT Market cap. Tether’s market cap has been tied to Bitcoins price going all the way back to July of 2018, its drop in market cap back in November 2018 proceeded Bitcoin’s fall from $6,000 in December 2018. More recently USDT’s Market cap has been rising in a parabolic manner since April, the same timeframe of BTC’s recent parabolic rise. If this phenomenon (which has been cited as a reason that Bitcoin’s bear market ended in February) continues then there is reason to believe we will see another rally over the next few weeks that could take BTC to the $10,000 level. This is due to the fact that Tether just ‘minted’ another $150 million in digital coins this week. 

For now Bitcoin continues to trade in a narrow range between approximately $7500 and $8000 but if history repeats itself as it has over the last year then a rise above $9000 is to be expected within the next few weeks.