Waiting on the Federal Reserve’s statement and Powell’s press conference | The Gold Forecast

Waiting on the Federal Reserve’s statement and Powell’s press conference

March 15, 2021 - 9:14pm

 by Gary Wagner

Market analysts and technicians have been consumed as they analyze the multiple factors that had created bearish pressure on both gold and silver pricing. Of all these factors, there are two intertwined factors that seem to have the greatest impact on creating negative market sentiment towards gold and silver. These are dollar strength, which is a direct result of rising yields for U.S. government bonds and notes the other factor.

One perplexing aspect has been market sentiment as it pertains to interest rate yields on the U.S. Treasuries’ 10-year note. The Federal Reserve has been on record stating that they have a line in the sand in which they will not raise their Fed funds rate throughout this year and most likely into 2022. Concurrently we have seen real signs of an economic recovery which is resulted in market participants believing that interest rates will rise much sooner than the current timeline presented by the Federal Reserve. This dichotomy is the result of market participants possibly be more optimistic about the timeline than reality predicates. Chairman Powell has stated on multiple occasions that although recovery has begun, the timeline to return to pre-pandemic economic growth in years, not months away.

During Chairman Powell’s press conference set to begin on Wednesday, it is highly anticipated that he will underscore the Federal Reserve’s commitment to be patient and to maintain the current policy even though the economic outlook has absolutely improved over the last 4 to 6 months.

However, it seems as though market participants are yielding to the mandate by the Federal Reserve with the net result of yields lessening which occurred after a dramatic rise in the ten-year note to 1.610%. The yield was off by approximately 2.1 basis points at 1.614% as bonds moved in the opposite direction.

As reported in MarketWatch, analysts at Sevens Report Research wrote in their latest newsletter that, “Gold is attempting to stabilize after the recent pullback, but if Treasury’s bonds continue to fall sharply, prompting yields, which trade inversely to bonds, to spike higher, then it will be effectively impossible for gold to hold recent lows.”

One thing is absolutely clear, and that is that the Federal Reserve’s current mandate has stayed rock-solid, providing liquidity through the purchase of $120 billion worth of treasuries and mortgage-backed debt through their quantitative easing, which they have stated will remain in play for quite some time. They have committed to focus on their primary mandate, which is maximum employment, and let inflation run hot over 2% if needed to accomplish that goal.

In an article penned by Greg Robb, he said that, “Economists stressed investors must understand the U.S. central bank has a new policy framework that is tied to economic data, not forecasts. So, the central bank will want to see where the economy is later this year before even beginning to ‘think about thinking about changing policy. It is also the author’s belief that Powell may repeat that investors shouldn’t get fooled by the rapid decline in the official unemployment rate. He will continue to highlight 9.5 million jobs have been destroyed by the pandemic.”

This recent pivot in market sentiment has had the net effect of moving gold and silver prices off the recent lows and a return to both precious metals rallying to a higher value.

Gold futures basis, the most active April 2021 Comex contract, is currently trading in Australia on Tuesday morning and is fixed at $1729.70. Silver also closed higher on the day with fractional gains of approximately 3%, with the most active May contract currently fixed at $26.325.

We have certainly seen both gold and silver become extremely oversold and then pivot from the overall bearish market sentiment to a bullish demeanor. We would expect this trend to grow in strength, taking both precious metals higher over the next few months.

Wishing you, as always, good trading and good health,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

On March 10th we issued trade alert to buy gold and silver.

Futures contracts:
Buy April 2021 gold (GC J21) @ the market current $1722.80. Place stop at $1665
Buy May 2021 (SI K21) @ the market current $26.26. Place stop at $24.70

Electronically Traded Funds:
Buy GLD at the market current $161.55. Place stop at $156.95
Buy SLV at the market current $24.24. Place stop at $22.50

Forex / spot markets:
Buy Forex gold @ the market current $1724.40. Place stop at $1667
Buy Forex silver @ the market current $26.17. Place stop at $24.75

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
long February Gold Futures at $1830 -$1843 and out at $1850 for a profit of $700 to $2000.00 per contract
long XAUUSD at $1841 and out at $1850 for a profit of $90.00 per mini 10 oz contract
long March Silver Futures at $24.29 and out @ $24.40 for a profit of $550.00 per comex contract
long GLD @ 1$71.50 and out @ $173.00 for a profit of $1.50 per share
long SLV @ $22.30 and out @ $22.50 for a profit of $0.20 per share
Long December gold at $1899. Stop hit at $1918, for a $1900 profit
Long forex gold at $1896.00. Stop hit at $1912, for a $1600 profit
Long December silver at $24.21. Stop hit at $25.07 for a $4300 profit
Long GLD at $180.46 and stop hit at $176.42 for a loss of $4.04 per share
Long SLV at $23.23 and stop at $22.78 for a loss of $0.40 per share
Long December Gold Futures at $1926 and stop hit at $1907.30 for a loss of $18.70 per ounce
Long Forex Gold at $1922 and stop hit at $1903 for a loss of $19.00 per ounce
Long December Silver Futures at $25.13 and stop hit at $24.73 for a loss of $0.40 per ounce
Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share

Gold Market Forecast

Although it is been perfectly clear that the current parameters which have put bearish pressure on both gold and silver prices needed to pivot before we would see either precious metal return in to rally mode. The primary events that we were talking about were Treasury yields and dollar strength. Over the last few trading days, we have seen that pivot begin to occur as yields have backed off of their highs and the US dollar is now trading lower.

On today’s video report we will once again go over our upside targets in both gold and silver as well as our stop placement and why they were put at the particular price point we put them at.

Market Overview

Economic Calendar