Each week Lo
ngleaftrading.com 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 (September 10 through September 14)
As we begin the last of a three week stretch of policy statements from the United States and Europe, the Precious Metals maintain their upward bias.
December Gold futures rallied to another new high overnight, as traders continue to price in last week’s news from Europe and anticipated bullish news from the US FED this Thursday.
Last week’s policy statement in Europe suggested the ECB will buy Bonds with a focus on Secondary Sovereign Bond Markets with maturities of up to three years. This was considered a supportive stance from the ECB and following the announcement, the Euro Currency rallied versus the US Dollar and the Precious Metals benefitted from the news. Gold prices continued to climb after Fridays Non Farm Payroll in the US showed that 96,000 Jobs were created versus the expected 130,000. This news led to safe haven buying in the Gold as traders believe this news will press the FED to announce another round of Quantitative Easing on Thursday following their monthly FOMC Policy Statement.
In other bullish news, unrest in South African mines continue to worry investors as the number of striking employees grows. Additionally, many of the larger banks in the United States released their forecasts for Gold, which suggest higher prices in both the short and long term.
All of this news combined, created (according to the CFTC) a six month high in Gold futures and options and another breakout above chart resistance.
The attached chart shows (identified by the red arrow) the breakout above the trendline that begins on chart highs from a year ago, and uses the high price from late February of this year. Now that Gold is above all of the important moving averages and above this resistance (red arrow), I would expect traders to use the same resistance trendline as support to begin the week. With all of the bullish news surrounding Gold, I would anticipate prices to stay underpinned and test $1750 early this week and possibly run to $1800 before the FOMC policy statement this Thursday.
Traders will need to pay very close attention to the language used at this Thursdays announcement by Ben Bernanke. Much of this rally is pricing in an accommodative stance from the FED, so if the FED disappoints, we may have a substantial correction on our hands. If the FED does announce another round of easing, I would expect the rally to continue.
Good luck this week in the markets. And please feel free to call or email my office. As a Senior Market Strategist with Long Leaf Trading, I advise customers in the futures markets and welcome any input from fellow traders. I can be reached toll free at (888) 272-6926 or by email at [email protected]
Thank you for your interest,
Brian Booth
Senior Market Strategist
888.272.6926
Holding any amount of USD cash
scares me. I am gradually selling off
my gold and silver holdings to set up
a small business. The story of my home
currency USD will ultimately be it's collapse IMO
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Hi Brian, I have read so many articles today that presume, forecast, predict that the German court will find the EU bailout constitutional, and their money printing will begin. Do you have any incite to add about the German court's decision. I guess their decision will be made at 4am EST Wednesday morning.
What happens if Bernanke announces that the money printing (alias quantitative easing) will not begin until after the election. Will markets respond negatively to that as well? Our markets are very high and have lots of room to pull back.
Trying to decide if I should sell off my profitable positions tonight.
Hey Ginny I think you have answered your own question. Without presuming to give advice, taking part profit or moving to a tight stop to let the market force you to take profit is a prudent action when you are contemplating a big move which potentially obliterates your profit.
As we saw recently, a big spike either way is not unusual in the current market, without necessarily altering the general trend. Good luck.
And it's insight. (Sorry to incite a session of the grammar police)
If you have doubled your money, then sell half and play with the house money.
Hi Steve,
I hadn't doubled my money so I sold entire position and banked profits. Your plan is a great strategy and I appreciate your input.
Hi Marek, thank you for the advice as well as grammar correction. Both are appreciated!!! I had a feeling something was wrong with my choice of words when I typed it. Spell checked......lol. I did sell my position and took my profits. Better safe than sorry. We still have the Bernanke to opine this week!
All the best to you,