Gold Chart of The Week

Each Week will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

Weekly Gold Report (June 10th through June 14th)

Last week provided some decent volatility in major markets across the board. Currencies were on the front burner after Europe kept rates unchanged at the ECB monthly policy meeting, and the United States Non Farm Payrolls closed out the week with somewhat of a lame number. While more jobs were created than expected, the unemployment rate did rise by a tenth of a percent.

To close out the trifecta of news from the most important Central banks in the world, we will have to wait until Tuesday to hear from the Bank of Japan who is scheduled for their monthly report, which is expected to provide very little unexpected news. Later in the week, the United States reports Retail Sales and weekly jobless claims followed by PPI and Consumer Confidence on Friday.

I do not expect any fireworks this week unless the BOJ surprises the market with news tomorrow that ignites a directional play in the Yen. If anything is revealed that suggests a slowdown in the BOJ’s Quantitative Easing Program, we may actually see the US Stock Indexes finish lower on a Tuesday for the first time in 22 weeks. If the BOJ maintains their stance on easing and continues to force the Yen lower, we can expect another higher close for the US indexes, just like the prior 21 Tuesdays.

This type of market behavior should continue until one of the three major Central Banks (US FED, BOJ, ECB) decide to change their policies regarding Interest Rates or participation in the Currency, Bonds and Stock Indexes. There is speculation that the US FED may have their sights set on the September FOMC announcement, but there is no guarantee that anything will change. Until there is a defined shift in policy from one of the three aforementioned Central Banks, most major markets will likely continue with very nice ranges to trade by the day and possibly the week.

For the retail investor, it will be important to pay very close attention to technical indicators while trying not to get lost in the stories you read each day. We again find ourselves at a point where each economic report in the United States provides market strategists the best opportunity to argue both sides of the trade. On one hand, a good report could lift the stock indexes but it may also be a drag on the markets because the FED may not need to support the market as much. On the other hand, a missed number could pressure the stock indexes, but could also be seen as a positive because it will prolong the participation of the FED. In my eyes, this emphasizes the importance of technical analysis versus trading the news.

The daily chart of August Gold Futures clearly shows a penant formation being established. When markets like Gold trade into tighter and tighter ranges for a period of two months like this, it has my interest. You will notice on the chart that the support trendline and the resistance trendline move closer to one another week to week. Technicians will be looking for defined breaks and more importantly, closes above or below these lines to confirm a directional play. I will continue to look for day and possibly swing trades in this narrowing range until the futures price confirms a breakout.

If you have any questions, please feel free to reach out to me directly. I can be reached via email at [email protected] or by phone at (888) 272-6926.

Thank you for your interest,
Brian Booth
Senior Market Strategist
[email protected]

** There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data contained in this article was obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Information provided in this article is not to be deemed as an offer or solicitation with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this article will be the full responsibility of the person authorizing such transaction.

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