Gold Resilient Amid Market Sentiment Reversal

This week the Federal Reserve addressed revisions to its current monetary policy in its attempt to reduce the current levels of inflation to an acceptable target. The statement released after the FOMC meeting, coupled with Chairman Powell’s press conference, resulted in extreme volatility in many financial sectors.

Market participants witnessed one of the strongest knee-jerk reactions and complete market sentiment reversal over 24 hours. The initial market sentiment was extremely short-lived as it was followed by a complete turnaround from the initial reaction the following trading day.

The release of the Federal Reserve’s FOMC statement, coupled with Chairman Powell’s press conference, resulted in a major rally in U.S. equities. The S&P 500 gained almost 3%, the largest daily gain in two years. Equities overall experienced the best Fed-day return since 2011. It significantly impacted gold, moving the precious yellow metal higher. Concurrently, the dollar had a significant decline losing almost 1%, and yields on U.S. Treasuries were also significantly declining. Continue reading "Gold Resilient Amid Market Sentiment Reversal"

Gold Bounces But Couldn't Hold Friday's Highs

June 2022 gold futures opened Friday morning at $1895.80, far above Thursday’s low of $1871. Trading to a high of $1921.30 and settled in New York up 1.1% at $1911.70. However, on Fridays, Globex trading remains open until 6 PM EDT before closing for the weekend. As of 5:10 EDT, gold has moved back below $1900 and is currently fixed at $1896.90, a net gain of $5.60 or 0.30% in after-hours trading.

Gold Futures Daily Chart

The tremendous price swings evident in gold over the last couple of days likely resulted from multiple factors influencing gold prices. Investors continue to focus on next week’s FOMC meeting. It is widely anticipated that the Fed will enact a .50 percent interest rate hike which will go into effect at the end of next week’s meeting. Concurrently it is widely believed that the Federal Reserve will begin to reduce its balance sheet assets over the next three years. Economists polled by Bloomberg news believe that the Federal Reserve will reduce its balance sheet from the current level of $8.8 trillion to $6.4 trillion by the conclusion of 2024. Continue reading "Gold Bounces But Couldn't Hold Friday's Highs"

Gold Has Repeated Bullish Pattern

Back in February, I shared with you an updated monthly chart of gold futures with a completed Cup & Handle pattern just ahead of a potential breakout above the preset trigger.

Most readers supported the ambitious target of $2,800 for that exact pattern. So let's check on the chart below and see how it plays out these days.

Monthly Gold Futures Chart

Indeed, the bullish impulse gathered enough power to break above the resistance that acted as a trigger for this pattern. The volume increased significantly, as it was required to overcome the barrier and confirm the breakout. The RSI has supported that rally as it turned north, either. Continue reading "Gold Has Repeated Bullish Pattern"

Gold Update: Handle Is Broken, Cup is Next, Target $2,800

Back in October 2020, one of our readers suggested that the famous Cup & Handle pattern could have been built in the gold chart. I have checked his idea and visualized it in that very chart below from the past.


At that time, the main element Cup had already been shaped (blue). The final part of Handle was yet to appear. I highlighted the hypothetical trajectory with an orange zigzag in the declining red channel.

Let's see what is going on in the gold futures monthly chart below to check if that assumption came true. Continue reading "Gold Update: Handle Is Broken, Cup is Next, Target $2,800"

A Macro View For Stocks, Commodities And Gold

Final rally for stocks, commodities to top, and a final down leg for gold?

This is one man asking one question among several I could be asking, given the volatility of macro indicators on a day-to-day, week-to-week basis. But as FOMC rides off into the sunset it is the scenario that I think is most probable, given the current state of some indicators we follow.

  • The yield curve is on a flattening trend that started signaling the beginning of the end of the inflation trades since the flattener began last April.
  • The Silver/Gold ratio has failed to establish any sort of firm signal to back the inflation trades since silver blew out with the ill-fated #silversqueeze promotion a year ago. That remains the case today.
  • Canada’s TSX-V index has gone bearish nominally and never did break its downtrend in relation to the senior TSX index. This is negative signaling for the more speculative inflation trades.
  • The Baltic Dry index of global shipping prices is in the tank, so to speak, having topped in October and dropped by 75% since.
  • Credit spreads are still intact, but bear watching as nominal junk bonds come under stress.
  • Industrial metals are still rising vs. the gold price, a still-intact macro positive, although Copper/Gold ratio continues to be undecided and a potential warning.
  • Gold had exploded upward vs. US (SPX/SPY) and global (ACWX) stocks. As we noted in an NFTRH update at the time, it would be subject to a potentially severe pullback whether or not the ratio has bottomed. The pullback started on Wednesday (FOMC day, and who is surprised?), and when gold bottoms vs. stocks the macro will be indicated to go quite bearish. For now, we’re neutral on the short-term.

With that macro backdrop in mind, let’s update three areas, US Stocks, Commodities, and Gold. Continue reading "A Macro View For Stocks, Commodities And Gold"