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 (August 5th through August 9th)

I am probably not alone in thinking that I am happy to finally have last week in the rear view mirror. Despite the fact that most economists had their sights set on the September FOMC Meeting, there was still the possibility of a surprise decision to taper ahead of next month. After hearing the news that the FED will maintain their QE stance, we still had to deal with Central Bank announcements from the BOE and the ECB. Following the same supportive outlook, we looked ahead to the monthly Non Farm Payroll on Friday.

Despite decent figures from the private sector in the US, along with an improvement in the weekly jobless claims, the NFP did miss expectations. Considering the fact that Ben Bernanke and Co. have pegged their participation largely to the labor market, this miss bought the market at least another month of FED support.

I don’t see much in this week’s scheduled news from the United States, but I am interested in seeing figures later in the week from China. China will report CPI, PPI, and Retail Sales in the second half of the week, and may have a decent impact on all markets. It has been speculated lately that China is not as well off as they have reported and if their numbers support that claim, we could see global markets affected overall.

The market that will have my attention the most after the figures from China are released, is Gold. While Gold futures spent a few weeks grinding out higher prices since late June, the market consolidated and slowly moved lower last week. With all of the Central Bank announcements, I truly expected at least a bit more volatility ahead of and after the announcements. But Gold stayed relatively flat throughout the week.

It is being said that China has been purchasing and importing physical Gold at a very fast pace lately and some speculate that this may be in anticipation of difficult times ahead. Whenever economists are making assumptions about China and the health of their economy, they tend to remain “on the fence” due to the fact that China always has the potential to shock the market will much better than expected numbers. Some speculate that their figures are even padded. The beauty is that they always try to keep the markets guessing, and their economy represents a large percentage of the overall market.

I expect to see Gold choose a direction out of the consolidation seen on the daily chart of the December Futures. While the futures prices broke the upward trend last week, there is still some small hope that prices will hold the consolidation of the 50day (green) and the 20day (black) simple moving averages. But I would only be interested in recommending a position in this contract after we see the reaction of Gold after China’s data is released. Until then, I expect a few more days of lackluster and rangy trading.

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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