From the Trading Desk
Gold kicked off the overnight session with a bearish tone. Worse than expected economic data out of China caused the Asian market to steadily offer gold down. Gold continued its descent lower into London trading hours and broke below support at $1,192. Stops were ultimately triggered in the low $1,190s and gold made it all the way down to $1,183.50 basis the active June contract. This was a previous area of support at the end of March so bids were waiting to scoop up gold at this level.
Besides the technical support at $1,183.50, worse than anticipated retails sales figures in the US gave gold extra legs to regain ground that it had lost earlier in the trading session. The USD weakened materially because of the poor US data and the euro is up over 1%. Overall, gold is still trading without conviction and is range bound. Traders will likely look to get short ahead of the 100 day moving average at $1,212 while the low $1,180s now have renewed strength as a support level since touching there earlier today. Silver perfectly held psychological support at $16 earlier today and its short term target is the 50 day moving average of $16.50.
Gold looks ugly all the way around for the various moving averages above. With it breaking down today below $1,190 it couldn’t get past $1,180 and silver held steady above 16 as noted above. From there the dollar fell and the metals rose. Please tell me the dollar is not part of the equation. I believe it is and when you combine the analysis of the dollar with many other indicators, you get a good feel for the precious metals market.
Most of the move was made early on for the metals and traders seemed to take the rest of the day off. Gold us up $1.00 in Asian trading and silver up 2 cents to $16.18. We may not know what we’ll get till Europe opens at this point. The Euro could continue to climb putting more pressure on the dollar and benefiting gold. This fits in with a few that I follow closely. This doesn’t mean I am bullish on gold though. But I’ll trade long the miners if my price targets are hit. So far they have not been hit, and technically on the downside, neither have JDST or DUST.
Part of what I do every single day is look to news to see how both sides of the aisle see the same news. For the negative view I turn to Zerohedge and for the positive spin CNBC. I also try and see what the Fed members are saying and their spin. I put more emphasis on the Fed members, but even then you have to view them all separately as to their views. In other words, trying to decipher news and Fed speak isn’t easy. I sometimes have clients I answer emails to ask me if I sleep. I do, but all this is exciting stuff for me. It’s my passion. Hopefully you all get something out of what I write.
Related posts
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.