There Is No Telling
Some haven demand today pushed gold higher along with a quietly softer U.S. dollar. In Europe, Ukraine and the terrorists in Iraq and Syria weighed a bit on equities sentiment. We wouldn’t call it a tidal wave but there are some concerns about the world economy, with China leading the worry party.
Europe is a party to all this, too. China-Europe trade has been falling and it has now reached a tipping point. Quietly, both Europe and the U.S. have recovered their manufacturing mojos and this is starting to hurt China’s largest economic sector.
Europe also felt some negativity from the shaky situation in Greece and all the talk of war in the Ukraine has got everyone jittery.
A slightly different tune is being sung by Citi, which said today through analyst David Wilson, “For the three months up to the FOMC meeting gold has behaved as a safe haven because of Greece, but now the focus has shifted back to the U.S. and the timing of the U.S. interest rates hike.”
That’s a nuance, but the focus on – as opposed to the reality of – an FOMC rate rise is premature. Regardless, the driving forces in today’s markets say the contrary. Europe and its various entanglements are very much on people’s minds.
Crude oil ended up higher for the third session in a row. That’s another outside market that helped gold.
OPEC said there would be greater demand for crude this year than their analysts previously projected and less supply from non-OPEC countries.
The fact that the U.S. oil rig count last week fell to a three-year low also bolstered prices, which are attempting to find a new floor after a brutal selloff in crude that demolished over half of the commodity’s value since June.
U.S. stock exchanges were all down, indeed, but they seem to have stabilized in late afternoon trading. A bit of the sheen is off the rally prompted by the glowing jobs report Friday. Naturally there was some profit taking.
Almost without warning, (at least to those of us outside the market), the U.S. 10-year treasury is knocking on the door of a 2.00% yield.
Wishing you as always, good trading,
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Gold Forecast: Proper Action
This morning we sent out a special "Trade Alert" to BUY GOLD AT MARKET
Maintain long gold position @ 1240, maintain protective sell stop @ 1227
Gold Market Forecast
A confluence of factors seemed to be supportive of gold coming out of the gate as it opened trading at the beginning of this week. A lower U.S. dollar and higher crude oil prices certainly were bullish factors in gold. But I believe the main motivating factor in gold’s rise today was a return to uncertainty as we looked at both Ukraine and Greece.
On a technical basis we see gold having found support at roughly 1237 per ounce. If you recall from our recent shows we have identified that as a key number of importance. This was the market top in gold, which concluded the first leg of this rally. The move from roughly 1130 to 1237 is what we have labeled wave one, and a critical support area.
The real question we have been asking ourselves is whether Friday's sell off negated the current model that we were looking at. That of course would change not only our overall disposition on the market but our current market strategy. Based upon the above fundamentals as well as technical factors, we did issue a buy recommendation this morning that is listed in the proper action section.