U.S. Dollar and Federal Reserve Highly Supportive of Gold | The Gold Forecast

U.S. Dollar and Federal Reserve Highly Supportive of Gold

July 29, 2020 - 7:22pm

 by Gary Wagner

Today it was a combination of dollar weakness, and an extremely accommodative Federal Reserve that continued to support the current bullish market sentiment for gold. Dollar weakness began in the middle of March after reaching a high of 103. In the last four months the dollar has lost approximately 10% in value and is currently fixed at 93.245.

The dollar has been falling in stages with the most recent slide beginning at the end of June when the dollar was trading at approximately 97.50. In the month of July, the dollar fell from approximately 97.50 to its current value. This takes the U.S. dollar to a two year low.

The Federal Reserve concluded this month’s FOMC meeting which was followed as always by a press conference with Chairman Powell. In a un-unanimous decision the Federal Reserve voted to maintain the current level of interest rates at near zero, that until employment picks up they would keep rates near zero.

In the press conference Chairman Powell began by stating, “Our country continues to face a difficult and challenging time, as the pandemic is causing tremendous hardship here in the United States and around the world. People have lost loved ones. Many millions have lost their jobs. There is great uncertainty about the future. At the Federal Reserve, we are strongly committed to using our tools to do whatever we can—and for as long as it takes—to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.”

Chairman Powell acknowledged that the pandemic has induced a “sharp decline in economic activity and a surge of job losses”. He cited data that indicates that “spending and production have plummeted in April, and the decline in real GDP in the current quarter is likely”.

Federal Reserve pledged to continue to buy at least $120 billion of U.S. treasuries and mortgage backed securities on a monthly basis. His statements underscored the severity of the coronavirus in the United States.

Coupled with a falling U.S. dollar we saw gold once trade to a new all-time record high. Spot or Forex gold is now a mere $30 from $2000 per ounce, as it is currently fixed at $1970.40. Gold futures basis the December Comex contract gained 1.15% and is currently fixed at $1986.50, after factoring in today’s gains of $22.60.

It is clear that until the United States is able to curtail the spread of the Covid-19 virus the economy cannot begin to stabilize let alone grow. As such we can expect the current bullish sentiment for gold to continue. This is not to say that we will not see periods in which gold pricing declines, however the overall trajectory of gold is and will continue to be higher.

Wishing you as always good trading and good health,

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Gold Forecast: Proper Action

This morning we sent out a trade alert to by December gold at the market. We also sent out a recommendation to buy Forex gold at the market.

Maintain your long December gold at $1978.50, maintain your stop at $1960.

Maintain your long Forex gold position at $1968, maintain your stop at $1940.

Maintain your long ETF’s; GLD, SLV and NUGT *

*we will be recommending a stop placement for your ETF’s

Closed trades:

Long July Silver at 27.65., stop hit at 27.49, for a loss of $0.16 per oz
Long XAGUSD at 27.58, stop hit at 27.49 for a loss of $0.09 per oz

We took our stop to the market as strong selling dominated trading.
Long June Gold (GC M21) at 1810. Out at $1816 for a profit of $590.00 per contract.
Forex: Long XAUUSD at 1810.20, out at $1811

Futures: Long June Gold (GC M21) at 1744.00. Out at 1760, for a profit of $1600.00 per comex contract
FOREX: Long XAUUSD at 1743.21. Out at 1759, for a profit of $15.79 per ounce

Our stop on SLV was hit @ 23.97, resulting in a profit of 0.72 per share. We went long SLV at 23.25.

Forex Silver: In @ 25.15. Out @ 25.87 for a profit of $0.79 per troy ounce

May Silver: In @ 25.21. Out @ 26.20 for a profit of $4450 per Comex contract

GLD: On April 12th our stop was hit at $162. We went long at 162.82. Trade resulted in 0.82 loss per share.

Futures: Gold (GC J21) in at 1722.80. Out at at $1728 for a profit of $520.00- per Comex contract.
Forex: XAUUSD in at 1724.40. Out at at $1729 for a profit of $4.60- per ounce.
ETF's: GLD in at 161.55. Out at at $161.90 for a profit of $0.35- per share

SLV in at $24.24. Stop hit at $23.50, for a loss of $1.05 per share
May 2021 (SI K21) in at $26.26. Stop hit at $25.3 for a loss of $0.96 ounce
Forex silver in at $26.17. Stop hit at $25,30 or a loss of $0.87 per ounce

On February 18 we entered a long April Platinum trade. In at $1282. Our stop was hit today (02/26/21) @ at $1217.00
SILVER FUTURES MARCH: Entry at $27.36, and then closed the trade later @ $27.45.
XAGUSD: Entry at $27.26,, our stop was hit at $27.39

We closed our positions in SLV:
First leg SLV: @ 22.95 .out at @ $24.99
Second leg SLV @ 24.60. out at @ $24.99

On Thursday February 4 stops were hit on our long GLD ETF. We entered at 172.14. Our stop was hit at $168.29 (the open on Thursday) for a $3.85 loss per share.

GOLD FUTURES APRIL: Entry at 1845 - 1859 . Stop hit at 1813 - average loss $3900 per contract
XAUSUD: Entry at 1845 - 1857 . Stop hit at 1813 - average loss of $38 per oz
SILVER FUTURES MARCH: Entry at 25.42 - 25.46 . Stop hit at 24.11 - average loss $6650 per contract
XAGUSD: Entry at 25.33 - 25.40 - Stop hit at 24.11 - average loss $1.3 per oz
long February gold @ $1890.00 and stop hit @ $1902.20, for a profit of $1202.00 per contract
long Forex gold @ $1886.00 and stop hit @ $1898 for a profit of $12.00 per OZ
long March silver @ $26.31 and stop hit @ $26.41 for a profit of $500.00 per contract
long GLD @ $177.26 and stop hit @ $178.00 for a profit of $0.71 per share
long SLV @ $24.67 and stop hit @ 25.00 for a profit of $0.33 per share
long February Gold Futures at $1860-$1866 and stop hit at at $1869. Average profit $600 per contract
long XAUUSD at $1856-$1862 and stop hit at $1866. Average profit $6
long March Silver Futures at $25.16 - $25.25 and stop hit at $25.30. Average profit $450 per contract
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share

Gold Market Forecast

Gold continues to break records is a trade’s to new all-time record highs almost on a daily basis. Today a combination of Dollar weakness and accommodative Federal Reserve continued to be highly supportive of gold pricing. We are expecting gold to easily challenge $2000 per ounce. The question is whether or not gold pricing will run straight through that price point or find some effective resistance. It is for that reason that on this last trade we put our stop and so tight behind current pricing.

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