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 (November 18th through November 22nd)

Welcome to another week that have the US FED in the drivers seat from beginning to end. I would love to take time to forecast a few economic figures released this week in Europe and the United States, but there is little reason to do so.

Last week we heard from Janet Yellen regarding the FED and the economy, and her dovish rhetoric stole the show. Traders and investors began buying equities the day prior to her speech and that continued during and after she made it clear that her stance was one that would be supportive of further easing.

This week we have a number of FED Members that are due to speak about the economy, and we expect their input to be more important than economic figures that are released. The  Minutes from the last FOMC meeting will be released on Wednesday afternoon, but we expect that to be supportive along with the speeches from multiple members.

Once upon a time, supportive news from the FED was seen as a reason to purchase Precious Metals like Gold and Silver. That relationship was fractured about a year ago when the spotlight came off these markets and began to shine on equities. There will come a time when equities will begin to slide and I expect the profit from this slide will shift to the Metals once again, and Gold will once again be a haven for flight-to-safety buyers.

The only way that this up-trend in the equity markets can be reversed would be if there is a shocking reversal in sentiment from all members that speak this week, which I highly doubt will be the case. Without a string of hawkish speeches this week, I believe we will see a continuation of small dips being bought in the US equities while commodities remain choppy.

Despite holding support near $1260 an ounce last week, the December Gold will remain vulnerable to a lower low unless we see a dip in US equities this week.

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 protected].

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.

8 thoughts on “Gold Chart of The Week

  1. Let's face it, precious metals are doomed in price for at least a year. Under $1000 for gold, $15 for silver. With the FED incapable of throttling the faucet, and banks still unwilling to increase the velocity of money equities are the only game on the planet. What we need is a new world wide threat of collapse... Pandemic? Aliens? Asteroid? Super volcano? Earthquake swarm? Pick a number, spin the wheel, takes your chances.

    1. Additional information regarding FED easing and banks squeezing.

      When the FED eases it increases monetary quantity which should increase inflation.
      But when the banks fail to lend out the trillions of dollars of easing they've accumulated then they throttle the velocity of money which reduces inflation. As long as we have intentionally reduced inflation, gold will go nowhere. And the FED must maintain zero inflation as it must keep interest rates near zero also. It's all be choreographed and the result is that gold will flounder without one of these pieces: easing, throttling, inflation, interest rates shifting dramatically. Or calamity inducing financial turmoil occurring once again.

    2. Case in point:

      Increased monetary base, reduced velocity = 0 inflation = 0 interest rates.

      And did you see that the ECB was considering NEGATIVE interest rates? Gold is going nowhere and fast.

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