This has been an interesting day. After trading sharply higher earlier in the session, gold prices reversed and are now sharply lower. It appears that although investors initially thought Bernanke was gonna keep his foot on the gas, it now seems that tightening is in fact on the horizon. Several Fed members, in fact, would have considered tightening as early as June. While this likely won’t be the case, the likelihood of the Fed beginning its exit strategy over the next few meetings seems like a strong possibility at this point. This sent the U.S. dollar higher and gold lower. Stocks sold off following the minutes as well.
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What a difference a few days makes. After gapping down huge on Sunday night, the precious metals have recovered-and recovered quickly. Gold filled the gap throughout the day on Monday and sent shorts scrambling to cover. In the process, gold prices made a key reversal on the daily chart and it would appear that a low could be in place. Ben Bernanke is speaking currently and it seems he is making it apparent he has no intention of slowing down the QE until unemployment or inflationary targets are met. This has sent stocks sharply higher on the day, while sending the greenback sharply lower. The price action appears to be hanging on every word of his comments, and who knows where prices will be an hour from now. The FOMC minutes are due out later today, however it would seem that this will now likely be a non-event as the market seems very focused on Bernanke’s comments this morning. Should gold remain strong today, a likely near term target could be the $1425 area which happens to coincide with the 20 day EMA.
It is important to reiterate however, that on a day like today with Bernanke speaking and the FOMC minutes due out-price action can turn on a dime. We will see how the dust settles later this afternoon!
Spot gold prices are experiencing another day of high volatility. After trading as low as $1360ish spot gold is currently quoted at $1379.70 down $14.40 on the session. It would appear that the short squeeze seen yesterday in which prices reversed from steep overnight losses to close sharply higher has run its course. Gold prices did however, make an outside key reversal day on the daily charts which can indicate a reversal in prices. Earlier strength in the U.S. dollar index has been fizzling throughout the morning and thus appears to be helping gold recoup much of its losses on the day. Other outside markets do not appear to be much of a factor today as oil trades slightly lower while stocks are slightly higher. Tomorrow’s FOMC minutes are on tap and today’s price action could also be indicative of some position squaring ahead of what could be some market moving information.
Spot gold prices have made a key reversal today after being sharply lower overnight. Spot gold is now quoted at $1387.90 up $27.70 on the session. There appears to be a large short covering rally taking place and with this key reversal the stage is now set for some upside.
Chart Source: QST (Click to enlarge)
Spot gold is currently quoted at $1361.20 up $1.00 on the session. This is after being sharply lower during the night session. Gold traded below the $1340 level overnight as it appeared that sell stops were run and silver hit the lowest level since 2010. It would seem however, that the weak Sunday night open was really just a continuation of the selling seen during Friday’s session and that the illiquid conditions made the price movement much more dramatic. There does not appear to be any other piece of news or headlines that caused the sell off. The price gap has been filled throughout the session however, and gold may in fact finish the day stronger as shorts decide to cover.
Monday does not have much in terms of data and the stocks are picking up right where they left off last week with decent gains thus far in the session. The U.S. dollar index is weaker however, while crude oil is trading up on the day. The market is awaiting Wednesday’s FOMC minutes which may give the market clues as to the timing and extent of any stimulus removal. This data could very well be the key driver for bullion prices for the week.
Spot gold prices are sharply lower again today as the hawkish rhetoric from the Fed along with a very strong U.S. dollar index are keeping sellers in firm control. With more and more talk of the Fed “Tapering” its bond buying program, or QE, the greenback has continued to strengthen while stocks continue to make new all time highs on basically a daily basis. Gold prices look set to challenge and likely take out the April lows. In fact,gold prices are now down seven consecutive sessions in a row, and although a sizable bounce at some point is likely, the market could have significant additional downside in its future. That downside could potentially take the price of gold bullion down to the $1155 area which would represent an approximate 50% retracement of the uptrend going back to 2005. Although the market does not currently look healthy, from a long term standpoint the uptrend may still be alive and well. Time will tell, but should that area hold it could prove to be an excellent long term buying opportunity. One must keep things in perspective, and although right now it appears the economy may be strengthening and the European situation seems to be under control, there will likely come a time when a price must be paid for all of the debt and money printing that has taken place. No one knows when this may be, but we look at falling gold prices as an opportunity to own the physical metal at better prices. Let’s also not forget that we have seen”bubbles” before, and we will see them again. When the next bubble bursts, gold prices could stand to benefit as the desire for perceived safe-havens once again takes center stage. Although prices may continue to head lower for the time being, it seems that the extremely active buying of physical gold at current levels is telling us something. We believe it is this demand for the physical metal that will ultimately turn gold prices around.
Spot gold prices are currently quoted at $1388.50 down $4.00 on the session. Prices have, however, seen a sizable bounce from the early lows. Prices are now trading at the lowest levels in approximately one month as fresh short sellers have come into the market as the technical damage gets worse. The story of gold’s weakness remains the same-more money being pulled out to be invested in equities as the stock market continues to soar. There is no inflation in sight, and the dollar, although down today, remains on a steep uptrend thus reducing gold’s appeal. With the fed looking at removing the punchbowl now as well, gold bulls will have their work cut out for them as the selling pressure mounts. It is very difficult to say right now what the catalyst for a rally in bullion could be. There is not strong paper investment demand currently, and whether or not the physical buyers are able to stop the bleeding again in this market remains to be seen. For now, we are of the opinion that the outside markets (dollar and stocks specifically) will continue to drive gold prices.om a technical standpoint nothing has changed-the bears are firmly in control with a re-test of the April lows likely on tap in the coming sessions. If the bulls are unable to hold that level, there could be significant downside to go.
Spot gold is currently quoted at $1395.30 down $30.50 on the session. Gold has again succumbed to selling pressure as the U.S. dollar index continues to move higher and stocks continue their seemingly never ending ascent. In addition, crude oil prices continue to drop and that is not helping bullion prices at all. Today’s producer price index reading was essentially in line with expectations and indicates that inflationary pressures continue to remain subdued. In fact, there really isn’t any inflation to speak of-and this is bearish for gold prices as investors often tend to buy gold as a hedge against inflation.
Really what we are seeing today is just more of the same. There has not been any new piece of news that is driving bullion lower. Until inflation expectations pick up, dollar weakness sets in, or the stock market begins to correct it is likely that gold prices will remain on the defensive. Today’s price action further sets the stage for a re-test of the April lows. We would expect physical buying to pick at those levels however, many buyers may wait to see if we see even lower prices the second time around and that could drive the market to fresh new lows.
Spot gold is currently quoted at $1426.80 down $4 on the session. The market has swung between gains and losses as investors digest a broad stock market rally and bearish outside market action. The U.S. dollar index is trading moderately higher today while crude oil is trading slightly lower. It seems as if the gold market is still searching for some sense of direction here. Technically, the bears remain in the driver’s seat. After trading sharply lower on Friday, gold prices recovered much of those losses in the afternoon. Although prices have been lower yesterday and so far today, it does appear that the decline is looking a little bit labored. Is it time for a turn around with so many people on the short side of the ship? We shall see. For now it seems that Friday’s lows hold the key-so far they have held but a break below will likely trigger additional selling and lower prices.
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