Weekly Gold Report August 26th through August 30th
A late week recovery in equities was enough to keep markets guessing on a direction as we inch closer to the September 18th FOMC announcement.
In the first half of last week’s trade, US equities were under pressure as traders booked gains on long positions in anticipation of a taper from the FED. But by late week, the “buy the dip” mentality that has supported equities for months returned and stopped the bleeding.
Until global markets are finally given the FED’s final decision on their Quantitative Easing plans, I believe traders should expect similar market behavior to what we saw last week. In light volume Summer markets, we should expect decent volatility on any news in the US, and abroad. Lighter volume markets give investors and traders the ability to create exaggerated swings in price with larger lot orders. When European traders and US traders return from Summer break, the timing will line up perfectly with the FED’s QE announcement. This should provide better directional movement. Until then, we expect further volatility and good intraday trading opportunities.
Gold Futures had a relatively quiet week last week until a late week surge higher. Until Friday, prices in the December Futures were rangy and without a convincing direction. But Friday’s rally drove prices to the obvious target of $1400 before running out of buyers. I continue to be skeptical of an extended rally in Gold until we get past the FED’s decision in September. While the chart below shows a nice bullish uptrend since June, I am still not confident in making long term commitments to the Gold Futures until September 18th.
If prices this week can begin closing above $1400 an ounce, it will be a good sign for further upside, perhaps an additional $25 higher. A failure to close above $1400 would suggest a lack of confidence, and profit-taking may ensue. Trading with stop orders and profit targets is how I plan to continue trading Gold.
If you would like to discuss trading in the Futures and Futures Options markets with me, please feel free to call or email me directly. You can reach me directly at (888) 272-6926 or by email at email@example.com.
Thank you for your interest,
Senior Market Strategist
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