Gold Trades to a High Just Below Yearly High

June 5, 2019 - 6:06pm

 by Gary Wagner

On an extremely volatile day gold has traded within one dollar of its highest price year to date for 2019. On a closing basis, gold hit an apex or the highest closing price on February 20. Although it traded to a high that day of approximately $1350, gold closed at $1347. That closing price is below the ceiling achieved over the prior two years which was approximately $1370.

Even though gold futures had an intraday high of $1340.90, current pricing is well below that with the August 2019 futures contract currently fixed at $1335.60. The intraday high occurred in overseas trading last night with a large portion of that move being related to U.S. dollar weakness. However as of 4:10 PM EDT the dollar is currently back into positive territory, with gains of almost 3/10 of a percent, and is currently fixed at 97.28. Dollar weakness in the overseas markets took the index to 96.655 before recovering.

Recent statements by Jerome Powell, chairman of the Federal Reserve, as well as James Bullard, CEO and President of the Federal Reserve Bank of St. Louis have revealed a major tipping point in the Federal Reserve’s monetary policy. The tone has once again become much more accommodative and dovish. On Monday James Bullard said that a rate cut may be “warranted soon”. On Tuesday the Federal Reserve Chairman said that the central bank was prepared to facilitate and sustain the economic expansion of the United States.

The current trade war between the United States and China has slowed the economy of both superpowers. In reference to that slowdown as well as the addition of a 5% tariff on Mexico beginning on June 10 Powell said, “We do not know how or when these issues will be resolved … We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”

The recent parabolic rise in gold prices have been factoring in a rate cut and a more accommodative Fed.

The next G20 meeting scheduled to begin on June 28 in Japan will be watched closely for any significant changes in current trade negotiations between the Chinese and the United States. Then in July the Federal Reserve will hold its next FOMC meeting were market participants will listen not only to language but more importantly to any announcements about rate cuts.

These two upcoming events will certainly frame and influence the price of gold as well as the value of the dollar index and shape the global economic forecast through the remainder of the year.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

Members section is now available for free, because 14 days has past since its publication.

Gold Forecast: Proper Action
On Tuesday, June 4th, we raised our stop from $1310.13 to $1321.13
Maintain Long August gold@ $1293.10
Maintain stop @ $1321.13
 
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, at any moment we could see a short term pause in this rally.  Today gold traded with a higher low and day higher high than yesterday, however it was the extended high of $1349 that caught the attention of traders.
 
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 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. 
Sentiment Indicator:
Gold -> Bullish
Silver -> Neutral
S&P 500 -> Bullish
Bitcoin -> Neutral
Bitcoin fundamentals by Joseph M. Wagner II:

Ever since yesterday’s decline in Bitcoin as well as all other major digital currencies markets are showing signs of a quick recovery. Bitcoin and its futures were trading relatively flat on the day but are picking up steam now at 4:30 PM EDT, with the CME’s BTC continuous futures trading up 3.21% at $7870.

The other major players in the cryptocurrency markets sustained a slightly worse hit yesterday with the exceedingly popular coin Eos which has a market cap of $5.8 Billion and daily trading volumes averaging $2.5 billion putting it above Litecoin, Ripple and Bitcoin cash in terms of usage. Eos was however hit harder than most major coins yesterday that experienced a 10-13% drawdown experiencing a drop of 21% over the last week. This coin is especially popular in china were cryptocurrencies are booming due to the Chinese flight from cash and the ever more devaluated Chinese Xuan. This flight from cash in China as well as India and other developing nations were a stable currency does not exist is one of the main reasons for Bitcoins recent rally.

For the time being I expect that BTC #F will trade within the range of $6981-$9500 for the remainder of the week a break above $9185 or below $7343 on a closing basis would likely signal another 5-10% move, most likely this will occur over the weekend and to the upside. So, depending on action over the next two days traders might want to position themselves prior to Friday’s close on the long side if any new fundamental data is revealed.