In spite of the fact that durable goods orders increased more than expected in May and a key housing indicator reached its highest level in seven years, gold was only slightly down.
The rise in economic indicators spoke soft words to the equities traders who bid up stocks almost 1% on the day, the first time in almost 9 weeks that there was real positive movement in the S&P, Dow and NASDAQ.
Consumer confidence also soared in reports issued today. It leapt over expectations by more than 5 points.
Additionally, somehow, with its money voodoo, China calmed fears that its liquidity crisis was deepening, adding more optimism for equities in which the Asian economies figure prominently in their business outlook.
For equities it was a classic risk-on day. Unfortunately, that risk appetite did not extend to gold's end of the table.
All the good economic news lifted the dollar, which had been falling or in the doldrums. More than half of today's drop in gold prices can be attributed to dollar strength.
Gold simply does not like all the good economic news. And, Morgan Stanley cut its 2013 gold forecast to $1,409 from $1,487. However, if one takes the current price point of 1278 and subtracts that from 1409, that gives gold bulls a $131 upside potential if Morgan Stanley is accurate.
Stirred into this potage is news of enormous write-downs by gold mining companies. The number being bandied about is $200 billion and rising. This, however is not necessarily bad news for gold bulls, since less exploration and investment in current mines may spell some scarcity in 6 to 12 months.
Let's wait for our opportunities, and hope we can make money on the predictions of analysis such as that provided by Morgan.
Wishing you as always good trading,
Gary S. Wagner
Any kind of upside bounce simply due to short covering after the dramatic fall we saw last week is absent within the market. Both gold and silver said at important Fibonacci retracement numbers and as of yet have not fallen below those price points. As you will see in today’s video even with our Outlook is bearish as it is we have to see if either gold or silver or both can maintain a price point above these levels. The price to watch in gold is 1273. A break below that price point could signal a dramatic fall to the next major level of support which is at 1202.
Proper Action: Look to sell on rallies
Support at 1273 then 1202 Bearish outlook
From the week of 06.07. 2013