Trading Thins as Participants Take Leave

December 28, 2016 - 5:05pm

 by Gary Wagner

Trading and volume have thinned as investors and traders are squaring and closing positions for this year, getting ready to celebrate a new year. As this current calendar year winds down, trading volume and liquidity continue to contract. Each trading session takes us closer to the conclusion of 2016.

US Dollar Surges in Value

The US dollar continues to gain value, today gaining another 2/10 of a percent to close roughly at 103.25, a .23-point gain. This is the highest the US dollar has been since December 2002. We currently do not see any major technical resistance till approximately 105.

Gold and Silver Post Modest Gains

Within this quiet and subdued trading, including a stronger US dollar, both gold and silver managed to post moderate gains. As of 4 o’clock EST, gold futures are trading up $3.80 (+.33) at 114260 (1141.70 spot). Silver gained over half of percent (.086) to settle at 16.075, up almost 9 cents on the day. While both markets are still dominated by bearish sentiment, recent action has alluded to the real potential for a bottom forming and price support holding at the recent lows.

We can expect that the next year could very well bring on increased volatility due to a number of factors. First and foremost is the Trump presidency, beginning on January 21.

Uncertainty is the Only Thing we are Certain Of

The fact that our President-elect is absolutely untested alludes to a multitude of possibilities and outcomes based upon his actions. What happens if his campaign promises and pledges actually become policy? What if that policy leads to tax reduction, massive infrastructure projects and a more favorable business climate, based upon a reduction of regulations? We could see continued downside pressure on the precious metals complex as a whole.

However, if President-elect Donald Trump is unable to deliver on his campaign pledges and promises, or if his brash style of leadership creates global tensions, we could see both gold and silver begin a rally that could be comparable to what traders witnessed in 2008.

The fact of the matter is, we simply don’t know. As such, we will enter 2017 with great uncertainty.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Gold Forecast: Proper Action
We are currently flat with no active trades in gold or silver.
 
However, as we said yesterday, we have seen the first signs of a potential bottom and support.
 
See market forecast and view today’s video report for more details.
Gold Market Forecast

Although we have not seen any major upside spike in either gold or silver prices, the fact that recent lows have held could be an indication of potential support with a bottom price in place for both gold and silver. In regards to gold, recent lows of 1123 matched up precisely to a 75% retracement of the rally which occurred in January of this year, taking gold from 1050 to 1380 per ounce.

Our current Elliott wave model is assuming that we are currently in a corrective “B” wave. This corrective wave will typically move anywhere between 50 and 75% of the rally that preceded it. With this in mind we are cautiously looking to see if a bottom is in play.

Trending Markets Forecast

For the second time since the presidential election on November 8, the Dow Jones industrial average dropped in triple digits. Inasmuch as the Dow moved within striking distance of that milestone number (20,000) trading activity over the last couple of days has moved it further from that price point.

It is still a matter of when not if the Dow will reach 20,000, however it seems less probable that that achievement will be reached in 2016.

Both the US dollar and crude oil continue to trade higher, although year end squaring of positions and exiting traders have curtailed any kind of major movement in the markets. Although there is a full day of trading on Friday, we expect diminished activity as we get closer to the New Year.