From the Trading Desk
US economic data on Friday showed that non-farm payrolls rose by 271,000 in October, substantially more than the consensus estimate of 185,000. The positive US data further validated a higher interest rate environment and had reverberations throughout the financial markets. The USD shot up against a basket of currencies while the euro fell to its lowest level in seven months. Yields on US government bonds rose, equities slumped, and gold tumbled below psychological support at $1,100 to close the week out at multi-month lows. As of today, gold has traded lower in eight of the last nine trading sessions. It has managed to consolidate somewhat over the past two trading days with its near term resistance and support defined between $1,100 and $1,075, respectively. Silver has followed gold’s path lower and will look to find bids ahead of the year’s low at $14.
The dollar is up to 99.25 now and I believe we break 100 soon enough. Gold is down $4.30 and near its 52 week lows which is still acting as resistance. Mining stocks are very weak and look like they are ready to implode if gold breaks down here. We are at the cusp I think. That short bullish move up yesterday was a good place to make a trade but nothing changed my mind about direction. Gold is headed lower. Right now only a stick save (hockey term in keeping the puck out of the goal) can save it.
The markets have become weaker too, but I noticed volatility all day became less of an issue as SVXY climbed the entire day and is presently up 2.71%. This tells me we may get a bounce in the stock market and I had been calling that we might most of the day in the trading room at Seeking Alpha, before SVXY even turned green for the day.
A higher market is the nail in the coffin for gold and most of these dips in the market can be bought. But that doesn’t mean we can’t profit on a dip either. Oil was down then up today and natural gas up. I look at commodities as a group and I do see oil falling in price still while many think it will climb higher.
I notice TLT rebounded a little today which still fits my overall outlook for lower rates in this deflationary environment.
I’m writing the gold section of the book right now, saving my favorite subject for last, and boy is there some revelations I am making. I am tackling Warren Buffett as well as the subject on manipulation and laying the groundwork for some good awareness for those interested in buying metals. It’s kinda fun to be able to not be distracted and sift through the data and present what is hopefully very tradeable advice for the metals. Naturally I make the case for going long.
For now we are simply looking for that bottom to come and go “all in.”
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About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.