Gold Continues to Rally, Moving Above Former Resistance

The first of the double bottom’s occurred during the first week of March and then trading back to that price point on March 31st. What followed was over a month of strong price advances that unfolded as a stairstep pattern in which gold prices would advance and then consolidate trading sideways at that new higher price level.

Prior to the conclusion of the double bottom, gold was trading under all three major moving averages as well as the 21-day exponential moving average, with all of the major moving averages in absolute bearish alignment.

gold may 10

On the chart that we have included in this article, we have added a basic Fibonacci retracement which begins at the record high of $2080 down to the double bottom at $1675. The first part of the rally took pricing to the 23.6% Fibonacci retracement, which occurs at $1771.80. Concurrently gold prices had broken above both the 21-day and 50-day moving averages. Following this $100 gain in gold prices began to consolidate and trade sideways for approximately two weeks which lasted till the end of April.

On May 3, prices began to move in almost a parabolic manner in which we saw gold prices rise of $1775 to current pricing at $1836.90 in just under one week. This took current pricing above the next major Fibonacci retracement level of 38.2%, currently fixed at $1832.80. On Friday, May 7, gold hit an intraday high above that key Fibonacci level; however it was unable to sustain that price point on a closing basis. That changed today when market forces opened and closed above $1882.

As of 4:41 PM EST, gold futures basis, the most active June 2021 contract is trading up $6.30 and fixed at $1837.60. According to the Kitco Gold Index (KGX), spot gold is currently fixed at $1836.50. On closer inspection, dollar strength resulted in a decline of $0.55, with traders bidding the precious metal up by $6.35, resulting in a net gain today of $5.80 per ounce.

Based upon our technical studies, the next real target for potential resistance occurs at the 200-day moving average, which is currently fixed at $1855.90. Data from the Commodity Futures Trading Commission was reported by Niels Christensen, editor at Kitco news, which revealed that “Hedge funds are still a little reluctant to jump into the gold market even as they reduced their bearish bets with gold prices pushing back above $1,800, according to the latest data from the Commodity Futures Trading Commission.”

A move by the large hedge funds into gold could certainly take the precious yellow metal well beyond $1900 per ounce.

For more information on our service, simply use this link.

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

Gary Wagner

U.S Treasury Secretary Janet Yellen Speaks – Part Two

To paraphrase she said that interest rates in the United States may need to rise to prevent the economy from overheating. Yellen said that the overheating is a direct result of the current administration’s economic investment programs become enacted.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in taped remarks to a virtual event put on by The Atlantic. “It could cause some very modest increases in interest rates to get that reallocation, but these are investments our economy needs to be competitive and to be productive (and) I think that our economy will grow faster because of them.”

She explained the massive amount of fiscal stimulus with an outlay of $4 trillion in 2020, and $1.9 trillion to date this year, and when coupled with President Joe Biden’s proposed “American Jobs Plan” could add even more debt to the ballooning national debt the currently exists. Although the administration has explained that there would be no cost to middle-class Americans, many advocates of his initiative to leave that the cost cannot be covered by raising taxes on corporations and the wealthiest alone. In fact, it is believed that it would further add to our national debt which is now at record levels.

That caused gold and silver pricing to sustain a large drawdown in trading yesterday and today. Yellen clarified her remarks when she spoke at the Wall Street Journal’s CEO Council summit. She said that she was not recommending or predicting that the Federal Reserve should raise rates. Furthermore, she said that she does not see a sustained problem for the economy as it bounces back from Covid-19 and therefore does not anticipate inflation being a problem.

On a technical basis the facts remain that gold has been mired in an extremely narrow range with current support at the 21-day exponential moving average, and resistance currently at a harmonic (a harmonic is when to different technical studies occur at the same price point) which occurs at the 100-day moving average currently fixed at $1797.10 and $1800 which is a key psychological level. Gold has traded in this to find a narrow range over the last 15 trading days and continues to move sideways.

Today’s statements by Janet Yellen in attempts to clarify her statements made yesterday did move gold higher by approximately $10 it is currently fixed in Australia up $2.60 at $1786.90. This is still shy by $13 of major resistance at $1800. All things being equal it will take a dramatic fundamental shift, or a dramatic change in market sentiment to move gold pricing above or below its defined range.

Chart_21-05-05_12gold May 5

For more information on our service, simply use this link.

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

Gary Wagner

 

Yesterday’s Advance in Metals Met Strong Resistance Today

In the case of silver, the most active June 2021 contract gained in excess of 4% and moved back over $27 per ounce. Gold gained a respectable 1.34%, and after trading to a high just $2 below major resistance at $1800, closing at approximately $1792 per ounce. Both single-day rallies were short-lived at best, with both metals giving back a substantial portion of yesterday’s gains.

gold May 4

In the case of today gold, is currently trading at $1779 after factoring in today’s net decline of $12.80 (-0.71). In silver, the most active June 2021 futures contract is currently fixed at $26.605, declining $0.35 on the day or -1.31%.

silvermay4.

Many analysts have speculated that the major factor taking the precious metals lower today was a recent statement made by the U.S. Treasury Secretary, Janet Yellen. Today Treasury Secretary Janet Yellen remarked about the current status of interest rates as set by the Federal Reserve’s Fed’s fund’s rate. She went on, stating that interest rates in the United States may need to rise to prevent the economy from overheating. Yellen said that the overheating is a direct result of the current administration’s economic investment programs become enacted.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in taped remarks to a virtual event put on by The Atlantic. “It could cause some very modest increases in interest rates to get that reallocation, but these are investments our economy needs to be competitive and to be productive (and) I think that our economy will grow faster because of them.”

Reuters attributed President Joe Biden’s initiatives which are labeled the “American Jobs Plan,” as the primary reason for Yellen’s comments today.

The Reuters article explains that “Overall the programs, which include stepped-up spending on infrastructure, childcare, and education, will make a “big difference” to inequality, Yellen said. Stocks extended their losses on Tuesday, and the dollar briefly touched session highs after Yellen’s remarks. The yield on 10-year Treasuries pared declines.

Republicans have criticized the proposed tax increases Biden expects to use to pay for his proposals, but Yellen said the effect of a change in marginal tax rates is “much less powerful in influencing growth in either direction,” adding that her aim is to make sure government deficits “stay small and manageable.”

Copper continues its historical climb

Although both gold, silver, and platinum, which compose the majority of precious metals traded on the futures exchange, all traded lower on the day, the industrial metal, copper, continued to reach historical price points. Copper futures basis, the most active July 2021 contract, gained approximately $0.03 in trading today and is currently fixed at $4.5580 per pound.

copper may 4

As we spoke about, yesterday commodity strategists at the Bank of America predict that copper could trade as high as $5.89 per pound ($13,000 per metric ton) within the upcoming months. Their comments posted yesterday in MarketWatch suggest that current stocks of copper will only last 3.3 weeks with demand as it currently stands. While China produces much of the world’s copper, it still is an importer, with 50% of copper used by China mined elsewhere. That coupled with the current infrastructure plans by President Biden suggests that the need for copper will only rise as economies worldwide recover from the recession created by the pandemic and slowly reopen businesses worldwide. With the exception of India and Brazil, the vast majority of countries are beginning to loosen restrictions and open more commerce creating economic growth.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold Rallies But At Least For Now Fails To Trade Above Resistance

As of 4:45 PM EST, the most active gold contract is trading up $25.50 and is currently fixed at $1793.20. After trading under pressure and closing lower last week, gold futures opened at $1768.10, which corresponds roughly to the close on Friday. Factors contributing to today’s strong upside move are U.S. dollar weakness as well as slightly lower yields on the U.S. 10-year Treasury note. It must be noted that today’s high of 1798.90 falls just shy of the current major resistance at $1800.

gold may 3

Currently, the dollar index is fixed at 90.95 after factoring in today’s decline of 32 points (-0.36). Today’s lower pricing gives back roughly half of the gains witnessed on Friday as the dollar index surged up approximately three-quarters of a percent.

Treasury yields had a slight fall losing approximately three basis points, and are currently trading at approximately 1.608. The higher 10-year note, which resulted in lower yields, was the result of the ISM manufacturing PMI report for April, which came in at 60.7. This was well below the economic forecast, which expected the number to be 65 or higher.

According to CNBC, “This compares to March’s level of 64.7. The index measures manufacturing activity via a survey of more than 300 manufacturing company purchasing managers conducted every month by the Institute for Supply Management. IHS Markit U.S. manufacturing activity grew at a record-high speed in April, data from a survey compiled by IHS Markit showed Monday. April’s Manufacturing Business Activity PMI Index came in at 60.5, above the 59.1 print in March.”

Silver, spot and futures rally

Silver had the strongest percentage gains of all for precious metals (gold, silver, platinum, and palladium), gaining over 4% in futures trading today. Traders have moved to June now the most active contract. June silver is currently fixed at $27.01 after factoring in today’s gain of $1.14. That amounts to a percentage gain of 4.43%. Spot or Forex silver is currently fixed at $26.87, which is the result of approximately $0.98, a net gain of 3.81%.

silver May 3

Copper futures continue their historic rally

Copper futures continued their historic price increase and are certainly within the range of taking out the all-time high that occurred during the first quarter of 2011. Although the all-time record high for copper futures is $4.65 per pound, the highest close on record of $4.4919 was taken out on a closing basis with today’s large gains. In fact, if copper holds the gains established today on a weekly basis, it would be the highest closing price ever recorded for the highly used industrial metal.

Copper May 3

According to MarketWatch, commodity strategists at Bank of America acknowledged that “The world risks “running out of copper” amid growing demand for the metal, paving the way for a spike in prices just as the global economic reopening gets under way.”

In fact, according to this report, current inventories, which are measured in metric tons, now stand at a level seen 15 years ago. This, according to the report, implies that current stocks will only cover 3.3 weeks of demand, and as such, Bank of America strategists believe that the price of copper could rise to 13,000 per metric ton, which amounts to $5.89 per pound in the upcoming months. They’re forecasting that the copper market’s deficits which are seen as drops in inventory, will continue through 2022.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold Pricing Continues to React to Higher Yields in U.S. Debt Instruments

Gold hit its highest price point this month last week, the week of April 19, with market participants taking gold futures just a couple of dollars short of $1800 per ounce. However, during the week of April 19, gold futures opened on Monday only to close on Friday roughly at the same price point; $1778. The first two weeks of April both resulted in gold closing higher on the week, with the largest weekly gain occurring during the week of April 12. During the second week of April, gold opened at $1745 and closed at $1780, gaining approximately $35 on the week. That was the largest single-week gain this month.

Gold with 21E MA April 30

Because gold is paired and traded against the U.S. dollar, one can see an inverse relationship between recent dollar weakness and gold strength over the first two weeks of April.

Monthly Gold April 30

During the last week of March, gold pricing hit a second double bottom, with market participants observing the precious yellow metal trading just below $1680. Concurrently the dollar index was at its highest value during the last week of March. The lowest value of the USD this year occurred during the first week of January 2020, breaking below 89.00 on the dollar index. Historically the dollar has not had this low of a value since the first few months of 2018.

The highs that were achieved during the last month of March took the dollar’s value to highs not witnessed since the first week of November 2020, in each occasion trading to a high value of 93.50. This was followed by a decline in dollar value for three consecutive weeks and ended this week with the dollar trading to a low of 90.40.

The dollar index surged in trading today, gaining three-quarters of a percent, a total of 0.682 points, and is currently fixed at 91.275.

LT Dollar Weekly chart

Dollar strength can also be deeply integrated into the rise or fall of U.S. Treasury bonds and 10-year notes. Higher yields in U.S. debt instruments can make that investment more attractive to investors seeking fixed income both in the United States and abroad. Higher yields in U.S. Debt instruments will also put downside pressure on gold, making the safe-haven asset class less attractive. It is this push and pulls of contrary market forces that have resulted in the recent price action in gold. Although gold closed lower on the day and week, it did result in a gain during the month of April.

For more information on our service, simply use this link.

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

Gary Wagner

 

Strong U.S. Equities, Bond Yields, and GDP Put Pressure on Gold

These events resulted in an extended trading range for gold. Gold traded to an intraday high of $1789.90 a low of $1756.60, and gold futures moved back to near on changed. As of 4:40 PM EST, the most active June 2021 Comex contract was fixed at $1772, which is the result of a $1.90 decline.

gold April 29

There were multiple factors that pressured gold today, the first of which was an exceedingly strong report on the gross domestic product of the United States. Today the Commerce Department released an advance estimate of the first quarter GDP for 2021. The official government website said that “Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2020, real GDP increased 4.3 percent. The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the first quarter, based on more complete data, will be released on May 27, 2021.”

The official website said that the real increase in GDP for the first quarter of 2021 was a reflection of increases in PCE (personal consumption expenditures), nonresidential fixed investment, government spending, residential fixed investment, and state and local government spending. These expenses were partially offset by decreases in private inventory investments and exports.

Investors today turned to U.S. equities favoring the risk-on asset class, which also pressured gold. The Standard & Poor’s 500 traded to a new all-time record high of 4211.47, a net gain of 28.29 points (+0.68%). Although the Dow Jones Industrial Average did not trade to a new record high, it gained almost 0.75%, which is a net gain of 239.98 points and closed at 34,060. The NASDAQ composite gained +0.22% today and is currently fixed at 14,082.5461.

Lastly, U.S. 10-year Treasury notes gained +0.18 today and currently have a yield of 1.638%. Today’s rise in the yield of 10-year notes followed the release of the first-quarter GDP estimates. The 30-year Treasury bond gained approximately two basis points, currently yielding 2.32%.

The latest numbers indicating strong growth, as reflected in the most current estimates of GDP, set the wheels in motion for both a strong finish in U.S. equities and rising yields in U.S. bonds. Concurrently they also pressured gold prices resulting in today’s low of $1754.60.

It seems as though market participants are disregarding the recent swelling of the national debt as well as the Federal Reserve’s balance sheet, which currently stands well in excess of $7 trillion. The economic fallout from these increasingly expensive burdens on the U.S. does not seem to affect the optimism for strong economic growth in the United States.

For more information on our service, simply use this link.

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

Gary Wagner

Chairman Powell’s Q&A and Dollar Weakness Support Gold Pricing

Gold futures traded to an intraday low of $1761.80 before recovering and trading positive on the day. The intraday low of gold today was precisely at the 21-day exponential moving average of $1761.80. As of 4:40 PM EST gold futures basis the most active June contract is currently fixed at $1781.80 after factoring in today’s gain of $3.00 (+0.17%).

gold April 28

Gold prices turned positive as the chairman of the Federal Reserve began his press conference with written remarks and answered questions from reporters. Multiple reporters asked him the same question in regards to tapering the Fed’s current quantitative easing through the purchase of $120 billion per month in U.S. Treasuries and mortgage-backed securities. This was the first and last question that was asked during the press conference. Chairman Powell seemed frustrated at the same question he was asked over and over in regards to tapering the Feds monthly asset purchases. Currently, the asset balance sheet of the Federal Reserve is over $7 trillion.

His response was consistent with former statements saying that “it is not time to start talking about tapering.” When pressed for clarification or some type of timeline he responded, “we don’t have a test for lift off or tapering to do with the virus”. He also underscored that the Fed would maintain transparency and let the public know well in advance their intent to begin to taper their monthly asset purchases. To paraphrase his response, he said, we will let you know when we are beginning to think about tapering. Signaling that the Federal Reserve will give advance warning to any change in their current extremely accommodative monetary policy.

Chairman Powell made it clear that the Federal Reserve will not taper its monthly asset purchases or raise interest rates until the United States reaches maximum employment and the annual inflation rate exceeds the current Fed target of 2% for an extended period of time.

Powell’s statements coupled with dollar weakness were the key factors moving gold out of negative territory to close positive on the day. Currently, the U.S. dollar index is down approximately 29 points (-0.32%) and fixed at 90.60. The dollar has traded below its 100-day moving average now for the fourth consecutive trading day. It remains below all three major moving averages, including the 50-day, 100- and 200-day moving averages.

While gold did not have a major upside move considering today’s gains of only three dollars, in relationship to the lows of the day gold pricing moved up substantially.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold Closes Fractionally Lower As Market Participants Await Fed Decision

The first major event occurring this week is this month’s FOMC meeting, which began today, and concludes tomorrow. Secondly, president Joe Biden will also address Congress later on this week, his first address to Congress since he was elected approximately 100 days ago. More on the president’s address the Congress in tomorrow’s opening letter.

In regards to the FOMC meeting, members of the Federal Reserve are discussing and evaluating their current monetary policy. Their decisions will become public Wednesday when the Fed releases a statement, which will be followed by Chairman Jerome Powell’s press conference.

It is highly anticipated that members of the Fed will vote to continue their current interest rate policy and leave Fed funds rate unchanged, which is currently set between zero and ¼%. It is also anticipated that the Fed will continue to add monetary liquidity through quantitative easing; the asset purchase program of the Fed which has been purchasing $120 billion worth of treasuries and mortgage-backed securities monthly throughout the pandemic.

It is highly unlikely that Chairman Jerome Powell will rock the boat in regards to raising interest rates, ending their asset purchases monthly, or focusing too intently on the recent rise in yields of the U.S. 10-year treasury notes. Many analysts believe, including myself, that gold prices could break above the key resistance level at $1800 if the chairman’s comments made during tomorrow’s press conference do not cause yields to rise in the 10-year U.S. treasury note.

As we spoke about yesterday, one possible wildcard in terms of commentary to be made by Chairman Powell is the growing homeless encampment which is very close to his Washington DC office. A Washington Post article penned by Rachel Siege and written on of April 17, begins with the following sentence, “As he drove past the intersection of 21st and E streets in Northwest Washington, a 68-year-old man peered through the window, struck by an encampment of homeless people here that grew from 10 tents to 20 in the past year. Then 30. Now 40.

The person driving was Chairman Jerome Powell, who it is believed has been “up at night, or that he kept thinking about them as he drove two blocks south to his office. Powell doesn’t know their names or backstories, either. But what he saw was clear. A visceral reminder of the uneven economic recovery. Right there in the Fed’s shadow.”

Gold futures basis the most active June 2021 Comex contract is currently fixed at $1776.10, after factoring in today’s $4.00 (-0.22%) decline. Collectively these two events could most certainly have a profound impact on the future price of gold. Both events could certainly underscore continued bullish market sentiment for the precious metals if bond yields do not rise.

gold april 27

For more information on our service, simply use this link.

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

Gary Wagner

Gold Closes Modestly Higher As Market Participants Await Two Key Events This Week

Gold futures basis the most active June 2021 Comex contract opened on Monday morning in Australia at $1777.60 and is currently fixed at $1781, after trading up $3.20 in New York.

Chart_21-04-26_10-54-28

The first major event occurring this week is this month’s FOMC meeting, which begins tomorrow, and concludes on Wednesday. As always, members of the Federal Reserve will meet to discuss their current monetary policy in regards to their Fed funds rate which is currently set between zero and ¼%, as well as their current asset purchase program which has been consistently buying $120 billion worth of treasuries and mortgage-backed securities.

It’s currently anticipated that Chairman Jerome Powell will not rock the boat in regards to raising interest rates or focusing too intently on the recent rise in yields of the U.S. 10-year treasury note.

As reported by MarketWatch, “When Federal Reserve Chairman Jerome Powell meets with officials next Wednesday to provide an update on the economy, there’s little expectation for any policy changes, but investors no doubt will be listening to his remarks for hints about what the recovery in employment or rise in inflation after the pandemic might mean for financial markets.”

One possible wildcard in terms of commentary to be made by Chairman Powell is the growing homeless encampment which is very close to his Washington DC office.

A Washington Post article penned by Rachel Siege, written on of April 17, begins with the following sentence, “As he drove past the intersection of 21st and E streets in Northwest Washington, a 68-year-old man peered through the window, struck by an encampment of homeless people here that grew from 10 tents to 20 in the past year. Then 30. Now 40.

The person driving was Chairman Jerome Powell, who it is believed has been “up at night, or that he kept thinking about them as he drove two blocks south to his office. Powell doesn’t know their names or backstories, either. But what he saw was clear. A visceral reminder of the uneven economic recovery. Right there in the Fed’s shadow.”

Her article ponders the following question concerning the most underserved citizens in the United States, “How can the Fed have done so much — slashed interest rates, propped up the stock market, bought up $3.3 trillion in Treasury’s and mortgage-backed securities — yet parts of the economy remain so broken?”

Obviously, this question has been on Chairman’s Powell a great deal lately having referred to the tent city three times in the last seven days which includes a recent 60-minute interview, a panel hosted by the International Monetary Fund, and finally during a talk to the Economic Club of Washington.

The second major event this week will begin on Wednesday and conclude on Thursday when president Joe Biden will hold his first address to Congress. Due to Covid-19 restrictions his address will be by invitation only, with a limited number of people residing inside the capital. This will be his first major address to congress since he took office on January 6.

This address will occur as he completes his first 100 days in office. Because of the pandemic president Biden did not address the Congress through the “The State of the Union”, a long-standing annual tradition. This yearly message is delivered by the president of the United States to the U.S. Congress near the beginning of each calendar year on the current condition of the nation.

It is widely believed that he will touch upon promises he made during his election, as well as focusing upon the $2.3 trillion infrastructure package he proposed earlier this month.

Collectively these two events could most certainly have a profound impact on the future price of gold. Both events could certainly underscore continued bullish market sentiment for the precious yellow metal.

For more information on our service, simply use this link.

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

Gary Wagner

Gold Closes The Week In-Essence Unchanged

While gold had just under a $50 trading range during the week, by Friday’s close, gold futures lost only $2.20. The June contract traded to a high this week of $1798.80 and a low of $1764.40.

Gold Weekly Candle Chart

In the case of today’s fractional decline, it was an uptick in the yields of the U.S. 10-year Treasury note, as well as robust data regarding strong new home sales, which was credited as responsible for the decline.

Yesterday the U.S. Census Bureau reported that new home sales as viewed through a seasonally adjusted annual rate came in at 1,021,000 in March. This is the fastest growth of new home sales since 2006.

As reported by Markets Insider, “In the bond market, treasuries once again showed a lack of direction before ending the day in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inch up by 1.3 basis points to 1.567 percent.”

According to Reuters, “Ten-year yields have stabilized and the inflation rebound to 2.6%, well above target, is likely to be short-lived. Still, swaps show that market expectations of future inflation are rising, and that means Treasury volatility may not be over yet.”

Even with strong tailwinds from dollar weakness today, gold prices were still unable to close positively on the day. The dollar index lost 52 points in trading on Friday, closing at 90.80, a net decline of -0.57%. The U.S. dollar has now closed lower on a weekly basis for the last three consecutive weeks. Four weeks ago, on the week of March 29, the dollar index closed at approximately 92.90. Since the last week of March to current pricing the dollar index has lost roughly 2.1%.

Dollar weekly candle chart April 23

Concurrently gold prices over the last four trading weeks had risen from the second of a double bottom which occurred during the week of March 29 when gold traded to a low of $1677, to the high this week of $1798.80. In the last four trading weeks, gold has had a range of over $100, and even with this week’s fractional decline has had a significant gain throughout the month of April.

The week in review

When we look at the price changes that occurred this week in gold, it is obvious that a number of fundamental events had an opposing influence on pricing. At the beginning of the week, gains were the result of a renewed concern of recent upticks in Covid-19 infections, pointing to a contraction in the growth of the global economy. India experienced the highest surge in new infections, surpassing 300,000 daily reported cases on Thursday. During the latter part of the week, gold prices declined as a result of higher yields in 10-year notes and solid economic data in the United States.

For more information on our service, simply use this link.

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

Gary Wagner

Gold Gives Up One-Half Percent Of Recent Gains

Gold began the last leg of this rally exactly a week ago when on Thursday, April 15, gold futures opened at $1736 and gained $28 on the day. This was followed by last Friday’s acceptable $10 gain. This week gold hit a high of $1798 before succumbing to mild selling pressure. Today’s nine-dollar price decline is the first decline since Monday of this week.

Gold candle chart April 22

This most recent rally in gold began at the end of March when market participants took pricing to approximately $1670, creating a double bottom from the lows seen on March 8. Gains since those lows are in excess of $100 per troy ounce, making this price decline mild considering the recent gains in April.

More significantly, the underlying fundamental events that have been at the root of gold’s price changes continue to be solidly bullish influences on the safe-haven asset class.

The root of many issues stems from an economic contraction in certain countries worldwide, as well as a major uptick in Covid-19 infections in certain global hotspots. While economic data out of the United States is indicating continued economic growth, globally, there are indications that the European Union and other countries are not rebounding as quickly as the U.S.

The U.S. Labor Department reported that benefit claims fell to 574,000 last week from a revised number of 586,000 a week earlier. This is the second consecutive week resulting in a sizable drop in unemployment claims.

It was reported recently that the economy in the European Union resulted in a decline of 0.7% in the last quarter of 2020. More alarming is that Lagarde said that “the incoming economic data suggest that activity may have contracted again in Q1. The ECB president did note that there is a chance for growth to resume in the second quarter.” This according to Anna Golubova of Kitco News.

The build-up by Russian troops on the border of Ukraine continues to grow.

In India, the crisis of new Covid-19 infections is astronomical. Today the Associated Press reported that India recorded more than 314,000 new Covid infections on Thursday alone. Considering that India is the second most populated country in the world, this number takes India’s collective Covid cases to 15.9 million. The Associated Press also stated that their healthcare infrastructure is currently overwhelmed due to a shortage of hospital beds and oxygen.

U.S. equities also tumbled today as market sentiment focused upon Biden’s new tax proposal to raise the federal income tax for those individuals making over $1 million per year to almost 50%. The Dow Jones industrial average gave up 321 points, or-0.94%, to close at 33,815.

The concerns that have fueled this most recent leg of the rally continue to mount. As such, we would expect any shallow dip in gold prices to be short-lived at best. While we could see a consolidation at these new price levels, the probability of gold entering another corrective period based on the current fundamental events which have fueled the recent rally are low.

For more information on our service, simply use this link.

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

Gary Wagner

Gold Futures Hit $1798.40 and Closed Up Over $15.00

Currently gold futures are fixed at $1794.30 that is a net gain of +0.89%. Although it has not challenged $1800 per ounce that would be the next target we would want to see gold futures close above.

gold April 21

Silver also made a solid upside move today gaining over 3% (+3.10%) a $0.80 gain. Currently silver futures basis the most active May 2021 contract is fixed at $26.64.

silver April 21

On a technical basis both gold and silver have broken above former resistance as they have effectively traded and closed above their 50-day moving averages. In the case of silver futures, the current fix of the 50-day moving average is $26.082. Silver’s longer-term moving averages such as the 200-day, and the 100-day have remained in bullish alignment with the short-term 50-day moving, average above the 100-day moving average, which is above the 200-day moving average.

In the case of gold futures, the June contract traded above its 50-day moving average on Thursday of last week when market forces resulted in a $28 gain. However, the longer-term moving averages remain in a bearish formation in that the highest moving average is the 200-day. Below the 200-day at $1858.10, is the 100-day at $1802.60.

If gold continues its upward trajectory, it should be able to close above $1800 as well as its 100-day MA which as we mentioned is just above $1800 per ounce.

According to many analysts this recent uptick is a flip back to the safe-haven asset class as concerns about rising Covid-19 infections in various countries has created a growing sense of uneasiness.

As reported by MarketWatch, Lukman Otunuga, senior research analyst at FXTM, told them that, “A growing sense of unease over the surging COVID-19 cases in Asia has hit risk sentiment and left investors on edge. With concerns likely to rise over how this may impact the world’s economic rebound from COVID-19, gold has the potential to push higher as risk-off makes a return.”

According to the Associated Press one of the real hotspots continues to be India. Currently India has the “second-highest number of cases at 15.6 million, and is the fourth globally by deaths with 182,553 deaths reported due to the virus. India reported today a record number of cases coming in over 200,000 for the seventh consecutive day.

The United States continues to lead the world in terms of active cases of the virus with 31 point million cases, or more than 20% of the global total which is 564,475 deaths.”

Today there were mild tailwinds from a lower U.S. dollar. Currently the dollar index is fixed at 91.07, after factoring in today’s decline of -0.17%. Additionally, the 10-year Treasury note has been stable currently fixed at approximately 1.56%.22

These factors mentioned above collectively could continue to be highly supportive of the safe haven asset class, taking both gold and silver to higher pricing over this next week and beyond.

For more information on our service, simply use this link.

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

Gary Wagner

 

Traders Continue to Focus on the Recent Double Bottom in Gold

The June contract did trade to a lower low than yesterday, hitting $1763.50 on an intraday basis. Gold also traded to a lower high when compared to yesterday; however, it closed solidly above Monday’s settlement price.

It was buying by market participants that resulted in today’s price advance. It can be clearly seen when we look at current spot or forex gold prices through the Kitco Gold Index (KGX). Spot gold is currently fixed at $1778.80, after factoring in today’s price advance of $6.80. However, dollar strength resulted in a decline of $2.35, with market participants bidding the precious yellow metal higher by $10.10.

kgx april 20

A major factor that definitely influenced market participants buying was a slight down-tic in the yield of 10-year notes, which are currently fixed at 1.56%. The ten-year note was fixed at 1.59% yesterday, so today’s fractional decline in yield certainly got the attention of gold traders.

Market participants are reacting to fundamental news as well as a strong technical identification of a double bottom. As we had spoken about on many occasions, lows that occurred on March 8, when traders took gold pricing to a low of approximately $1674, tested the fortitude of the bullish faction’s belief that gold pricing was oversold. This resulted in a rally that was short-lived. The first attempt of a rally failed at approximately $1742. On March 31, the lows of March 8 were retested, creating a double bottom as gold prices declined from $1742 to a low of $1678 at the end of March.

April 20 Gold double bottom

On April 1, traders moved gold pricing above the bottom that occurred on March 30 and 31st, taking gold futures to approximately $1730. Gold continued to make higher highs throughout the first week of April before consolidating and trading sideways with resistance between $1750 and $1760 up until the end of last week. On Thursday, April 15, gold scored dynamic gains of approximately $28, which broke above the consolidation that occurred during the first two weeks of April. This was followed by a $10 gain on Friday, April 16.

Gold closed lower yesterday; however, it did trade to the highest intraday high of $1790 since the lows of the double bottom before settling at $1770. Today’s additional gain took gold pricing to $1779.20. Our technical studies indicate that there is minor resistance at $1784 based upon the 38.2% Fibonacci retracement. There could be major resistance at $1802, which is based upon the 100-day moving average.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold And Silver Continue To Gain Value As Multiple Events Support Safe-Haven Assets

Rising geopolitical tensions, recent drops in the yield of 10-year Treasury notes, dollar weakness, a highly accommodative Federal Reserve and concern about the rising national debt all collectively moved gold and silver to multiweek highs.

The last time gold traded to $1784 occurred on February 25. On that date, gold opened above $1800 and closed at $1775. The last time gold closed above today’s highs occurred on February 22. This week gold opened at $1745 and gained approximately $30 based on today’s close.

june gold april 16

As of 4:30 PM EST, gold futures basis the most active June 2021 Comex contract is currently trading up $9.80 (+0.55%) and is fixed at $1776.60. Silver basis, the most active May 2021 Comex contract, is currently trading up $0.061 (+0.23%) and fixed at $26.025. This follows yesterday’s strong gains in both precious metals. Seeing as on Thursday, gold futures gained $28.10, and silver futures gained $0.40.

silver April 16

Dollar weakness provided mild tailwinds as the dollar index is currently fixed at 91.54. The dollar traded at 92.21 on Monday and lost 67 points on the week. The result is that the dollar index was devalued by -0.067% this week.

The U.S. 10-year Treasury note traded lower this week and is now yielding approximately 1.56%. This week’s decline also provided solid tailwinds aiding the safe-haven asset class.

On Wednesday, April 14, Chairman Jerome Powell spoke virtually at the Economic Club of Washington DC. He addressed the concern that many economists have about the ever-growing national debt that has been created from fiscal stimulus as well as the monetary policy of the Federal Reserve.

In response to these concerns, Chairman Powell said that “The U.S. federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.”

In addition to that there is rising tension between the United States and Russia. Yesterday President Joe Biden signed an executive order imposing new sanctions on Russia based on information suggesting that they had interfered with our election as well as an increased amount of Internet hacking and other “malign activities,” which include sending additional troops to Ukraine as well as the continuation of persecution of Russian dissidents in specifics to Alexei Navalny.

In response to these issues, the White House issued an “Executive Order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.” The full Executive Order can be read by following this link.

There is also increased tension with China. Today President Joe Biden met with the Japanese Prime Minister, Yoshihide Suga. According to CNBC, “The two leaders will gather in Washington in what will be the U.S. president’s first in-person summit with a foreign leader since his January inauguration. The meeting comes as the U.S. seeks to challenge China on issues ranging from human rights to unfair trade practices.”

These events collectively have been the driving force moving both gold and silver to gain value this week. All things being equal, they could continue to drive gold back above $1800 per ounce and silver above $28 per ounce.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold and Silver Surge As Yields Drop And Geopolitical Tensions Rise

As of 4:40 PM EST gold futures basis the most active June 2021 Comex contract is currently trading up $28.10 (+1.62%) and is fixed at $1764.40. Silver basis the most active May 2021 Comex contract, is currently trading up $0.40 (+1.57%) and fixed at $25.925.

gold april 15

The economy in the United States is exhibiting solid economic recovery which has raised genuine concerns that inflation will continue to rise. However, the largest force moving both gold and silver higher is yields dropping in 10-year notes, which fell today to yield 1.56%.

silver april 15

In addition to that, there is rising tension between the United States and China, as well as between the United States and Russia. In regards to the increased tension with China, it seems that Taiwan is once again a major concern to the current administration.

In addition, President Joe Biden today signed an executive order imposing new sanctions on Russia based on information suggesting that they had interfered with our election as well as an increased amount of internet hacking and other “malign activities” which include sending additional troops to Ukraine as well as the continuation of persecution of Russian dissidents in specifics to Alexei Navalny.

On April 15, the White House issued an “Executive Order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.” The full Executive Order can be read by following this link.

The Executive Order is sanctioning Russia with financial sanctions, including a ban on U.S. financial institutions from participating in the primary market for the ruble as well as non-ruble denominated bonds. It also designates six technology companies run by Russia, accusing them of supporting the country’s intelligence services and block the property that they or their affiliates might detain in the United States, among other sanctions.

This Executive Order is certainly indicating that the administration is willing to impose rigid and far-reaching new sanctions against Russia.

Lastly, there is the issue of growing debt based upon the expenditures over the last two years in regards to reigniting the economy in the United States, which has been so severely affected by the pandemic. These events collectively could certainly be the impetus for both gold and silver to continue to rise higher as they have in trading today.

For more information on our service, simply use this link.

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

Gary Wagner

 

Gold Trades Lower Within A Narrow Trading Range

This high was hit after gold traded to a second low, or double bottom on the 30th and 31st of March. This follows the first low of the double bottom which occurred on March 8 when gold was traded to a low of $1673. The second low in the double bottom came in slightly above the former low at $1676.

Simply put, this shows that gold is still dominated by the bearish faction, with the bullish faction attempting to regain control now that we have had a higher low and a higher high than previous.

Today, gold futures basis the most active June contract gave up much of yesterday’s gains. Currently, June gold is fixed at $1736.50, a net decline of $11.10. Today’s close occurred just above the 21-day exponential moving average which is currently fixed at $1736 per ounce. Although gold has been trading sideways over the last eight trading days it is currently above the series of tops that occurred in mid-March. Our technical studies indicate that the selloff in gold which began at the beginning of January when gold was trading above $1940 concluded at the beginning of March. When the first lows of the double bottom occurred, that being said, momentum to the upside has been slow and tenuous at best but has the real potential to continue higher.

gold April 14

Resistance begins at gold’s 50-day moving average which is currently fixed at $1753.90, with the next level of resistance occurring at which is the 78% Fibonacci retracement. The data set used for this retracement begins at the new record high at $2088 and concludes at $1673, the first low of the double bottom we spoke about above.

Chairman Jerome Powell spoke virtually today at the economic club of Washington DC. He addressed the concern that many economists have about the ever-growing national debt that has been created from fiscal stimulus as well as the monetary policy of the Federal Reserve. In response to these concerns Chairman Powell said that “The U.S. federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.”

Although he said that there is no question that the Federal Reserve and U.S. government could service and issue that debt for the foreseeable future the fact of the matter is that current estimates put our expenditures in 2021 at 1.25% of GDP. That being said, it will be hard to fathom exactly what steps will be necessary to service the current level of debt. Also, any major change in interest rates would make that debt even more difficult to service. Many such analysts, including myself, continue to believe that we have not even begun to deal with the economic fallout that will follow our mounting debt. While all are in agreement that the current U.S. budget is on an unsustainable path, real solutions are needed, and no viable solutions have been presented.

For more information on our service, simply use this link.

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

Gary Wagner

Part 2: Higher CPI Should Boost More Than Just Gold Prices

BTC is trading at approximately $60,500. This marks the first close above $60,000 for Bitcoin futures, and I believe we will see $65,000 by week’s end.

-excerpt from previous article on 4/12/2021.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. 20 of the 21 indexes rose compared to the previous month, most notable energy of which gasoline saw a 9% rise. Combined there was a 0.6% increase in the month of March. This beat out the increases seen over the last six months and brought the CPI up to a 2.6% increase over March 2020.

Tuesday main

This number came in above estimates and we did see a rise in the price of gold and silver but also Bitcoin and Ethereum. It looks like we will indeed see $65,000 in BTC as today’s record high came in about $500 short of that at $64,450. Where will Bitcoin go to from here?

Tues chart #2

My prediction of a new record this month in April is that we will reach at minimum $69,600 this is based on Elliot Wave models and Fibonacci extensions. Although it has the potential to go even higher. In tandem to this we will see Ethereum trade to the prices I mentioned yesterday, today we saw an equal rise of about 5% on the day. The month of April will be big for Bitcoin.

tuesday chrt 1

The Consumer Price Index Indicates Growing Inflation

Inflation via the CPI came in above expectations by economists. The numbers showed that the CPI gained +0.6%, which was 10 points above consensus and the highest single month tally since June 2009. When compared to year over year which is considered a more modest inflation metric the CPI is +2.61%.

According to the U.S. Bureau of Labor Statistics, “The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all-items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month. The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent.”

According to Reuters, “The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all-items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month. The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent.”

The CPI, along with dollar weakness were both major factors in taking gold and silver futures higher. As of 5:36 PM EST gold futures basis, the most active June 2021 Comex contract is fixed at $1746.20, after factoring in today’s $13.50 (+0.78%) gain. Silver futures basis, the most active May contract gained almost $0.54 (+2.16%) and is currently fixed at $25.405. The dollar lost 0.314 points in trading today and is currently fixed at 91.83. Also, the U.S. 10-year Treasury note was down by 3.9 basis points and currently has a yield of approximately 1.62%, declining after the release of today’s CPI data.

gold April 13

Spot or forex gold, according to the Kitco Gold Index, gained $13.10 in trading today. On closer inspection, dollar weakness accounted for $4.85, with the remaining $8.25 gain directly attributable to traders bidding the precious metal higher. Spot or forex silver is currently fixed at $25.33. Only $0.07 can be attributed to dollar weakness with the remaining $0.47 a direct result of trading activity.

silver April 13

The question with the most recent CPI numbers is whether or not the inflation pressure is temporary or a sign that inflation will continue to rise. Fawad Razaqzada, a market analyst at ThinkMarkets, said, “Inflation will probably pick up further and the numbers for the next few months may appear abnormally large as base effects from the 2020 lockdowns skew the data,”

The Federal Reserve’s revised mandate has indicated that they will let inflation run hot above its former 2% benchmark in lieu of focusing on their mandate of maximum employment. This will undoubtedly continue to have a bullish affect gold and silver.

For more information on our service, simply use this link.

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

Gary Wagner

 

Traders Wait for U.S. Consumer Price Index Numbers

According to Wikipedia, “A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.”

Bloomberg today reported that CPI inflation has risen to 5.5% in March. According to the report, “retail inflation rose further in March as fuel and transportation costs increased alongside some categories within the food basket.”

A poll by Bloomberg is forecasting March retail inflation at 5.4%. They also reported that consumer price index inflation stood at 5.52%, which is almost ½ a percent increase from February’s numbers which came in at 5.03%. In January 2021, the CPI data came in at 4.06%. Their pre-release numbers were created by the Ministry of statistics and program implementation today.

According to Aditi Nayar, core inflation computed by ICRA ltd. rose to 6% in March, chief economist at the rating agency.

With inflation moving higher, we have gold futures reacting in a tepid manner selling off today by a total of $12.60 (-0.73%) and is currently fixed at $1732 per ounce. The primary force taking gold lower today was rising yields in the U.S. 10-year Treasury note. Today, the yield moved up to 1.671% in trading today with the 30 year treasury bond moving lower, yielding 2.337%.

gold April 12

As reported by CNBC, “Treasury yields rose slightly on Monday after Federal Reserve Chairman Jerome Powell on Sunday reiterated the central bank’s commitment to maintaining loose monetary policy.”

The Federal Reserve could undoubtedly come under pressure with strong economic forecasts regarding the second quarter of this year. Recent projections indicate that economists are forecasting the second quarter of this year to grow by more than 9%. In addition to strong growth, the March jobs report’s expectations are extremely strong, indicating a hiring surge.

CNBC projects that are unemployed Americans will return to the workforce in large numbers. Economists polled by Dow Jones expect to see 675,000 jobs added in March as the economy reopened more broadly and the number of vaccinated people increased. The unemployment rate is forecast to fall to 6% from 6.2% in February.”

There is no question that there has been a tremendous uptick in economic growth in the United States. Concurrently we also see inflation beginning to heat up as it has risen month over month since January. If the projections are correct, this could have an extremely bullish undertone for gold. It will have to overcome the recent rising yields of 10 year treasury notes that have put gold under pressure.

For more information on our service, simply use this link.

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

Gary Wagner

Gold Futures Retrace Much Of This Week’s Gains

Gold futures basis the most active June 2021 Comex contract lost $14.10 in trading today.

gold april 9

Dollar strength was a minor component in today’s price decline. Today the dollar index gained 0.111 points or 0.12%. The vast majority of today’s decline was attributed to market participants bidding the precious yellow metal lower. Interestingly this was the exact opposite of yesterday’s price gains with the majority of gains due to market participants actively buying that dip and dollar weakness contributing only a fractional component of yesterday’s $14.90 gain.

Silver basis the most active May 2021 Comex contract lost $0.26 today after gaining $0.28 on Thursday. Currently silver futures are fixed at $25.325.

silver april 9

Bitcoin futures which are traded on the Chicago Mercantile continued in their price ascent, gaining $520 today and is currently fixed at $58,675 per coin.

While yesterday’s gains in the precious metals and U.S. equities were a direct result of the minutes released from last month’s FOMC meeting, the minutes underscored the current mandate of the Federal Reserve which has not changed since interest rates were dropped to between 0 and ¼%. Additionally, they continue to add $120 billion per month to their asset balance sheets through purchasing United States bonds and mortgage-backed securities.

The Federal Reserve continues to be aligned with the majority of central banks worldwide, with both the world bank and the Federal Reserve continuing to have an extremely accommodative monetary policy. In fact, on Tuesday the IMF backed the Fed’s decision to be patient and continue to keep interest rates extremely low with the intent of maintaining the current interest rate for years to come.

The International Monetary Fund through the central banks of its member nations continues to its intent to maintain an extremely accommodative monetary policy. In their latest global financial stability report they sent a strong message that there continues to be a need for the current dovish demeanor of central banks worldwide. Both entities are acutely aware that we live in a global economic world in which positive movement in any major country has a spillover effect to other countries and that raising rates too quickly could easily stifle the economic rebound witnessed in the United States and to a lesser extent in Europe.

Chairman Jerome Powell’s statement continues to propose that any rise in inflation is transitory and will be short-lived.

In disagreement, William Watts wrote an article in MarketWatch yesterday. The author spoke about his deep concern that there is the biggest inflation scare in 40 years which will become apparent extremely soon.

“It’s unclear whether inflation will see a lasting comeback, but a booming, stimulus-fed economy rebounding from the COVID-19 pandemic seems all but certain to send some near-term inflationary shock waves through financial markets in coming months.” He cites Christopher Wood, global head of equity strategies at Jeffrey’s in a note written on April 4 that states “there has been a sudden surge in demand following a supply shock which is a classic recipe for a pickup in inflation.”

Of course, if inflation does begin to ratchet up higher it will have an extremely bullish impact on gold and silver because it will devalue the U.S. dollar which has an inverse relationship between the price of those two precious metals. He also warned that investors should be paired for the biggest inflation scare in America on the reopening of the economy since the early 1980s when former Fed Chairman Paul Volcker crushed double-digit inflation by the late 1970s.

Which leads to the question he ponders, which is just how long-lasting will inflationary bout continue? And how the Federal Reserve will respond should that occur? Higher inflation will lead to higher gold and silver prices and have tremendous bearish implications for U.S. equities.

The Fed has also agreed that they will let inflation run hot in lieu of their primary mandate (which is maximum employment) above its former target of 2%. Also, members of the Federal Reserve have stated that they will let inflation run hot for an unspecified amount of time.

Unquestionably upticks in inflation will take gold and silver higher so the question becomes which hypothesis is correct? The analysts or the chairman of the Federal Reserve?

For more information on our service, simply use this link.

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

Gary Wagner