WEEKLY GOLD SERIES (August 13-August 17)
If Gold traders were patient throughout last week’s choppy trade, those who held long positions were rewarded on Friday with a convincing move higher. Throughout the early part of the week, we saw the Euro Currency correcting its rally from the prior week, and this action sent the US Dollar up to resistance, which ultimately kept a lid on any hope for a bounce in the Gold.
Without any big news last week to follow the promises to save the Euro, and without any further developments to follow the FOMC and ECB policy statements, major markets including Gold were overall fairly stagnant and light in volume. It was not until after the US Trade Balance Deficit showed a decline during June and there was a decline in weekly jobless claims, that the Gold futures caught a decent bid.
As you can see on the chart provided, the choppy action in last week’s trade kept Gold futures above the 50 day moving average (Green) and right on the 100 day moving average (Red). After closing above the 100 day on Thursday, Gold had an outside up day to close the week. Normally, I would use the outside up day as an indicator for a continued rally into this week. While I am optimistic, I also remain cautious because of the prior chart highs above Fridays close. Throughout the months of June and July, December Gold futures have rallied into the high 1620’s and low 1630’s, and have failed each time.
This week, I will be paying close attention to the Euro Area GDP report and how it affects the Euro Currency and the US Dollar. If the Euro can stay steady or correct last week’s decline, this should help pressure the US Dollar, which in turn would support Gold prices. If the Euro happens to fail miserably this week, we will not get the chance to see if Gold can finally break and close above the Summer high prices in the low 1630’s. I feel that last Fridays close in Gold was a good sign for Gold Futures, but I also know that technicians will be looking for convincing closes above the June and July high prices before they target the 200 day moving average (Blue).
Good luck this week in the markets. And please feel free to call or email my office. As a Senior Market Strategist with Long Leaf Trading, I advise customers in the futures markets and welcome any input from fellow traders. I can be reached toll free at (888) 272-6926 or by email at firstname.lastname@example.org
Thank you for your interest,
Senior Market Strategist