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Weekly Gold Report (February 4th through February 8th)
It should come as little surprise that we begin this week correcting a portion of last week’s strong move up. After a fun filled stretch of reports in the United States, including an FOMC announcement, Consumer Confidence figures, and Employment numbers, we head into a light news calendar for the next five days here in the states. There are scheduled Interest Rate decisions this week in Australia, New Zealand, Great Britain, and from the ECB, which should bring some movement to global currencies and in turn, commodity prices.
The standout in last weeks reports in the United States was the fact that the FED announced they will maintain their usual stance on the market and will continue easing at the same pace until things improve. Outside of this news, most of the major reports were mixed at best. One day, markets rallied in the face of disappointing news while the very next day the same market would give up points after a similar misses. Similar was the price action on favorable reports. So throughout the week we tried not to get too caught up in the news and we stuck to technical analysis as the basis for our trades. This week should not be any different.
Looking at last week’s action in the Gold, I can point out only a few things that will make me sound like a broken record but until the chart shows me something different I will maintain these ideas. First, we continue to be in a traders (not investors) market. Second, Gold prices continue to target GAPS on sharp moves up and down.
It is no secret to anyone that has read my report over the last six months that I like to recommend buying breaks in the Gold Futures. In the week leading up to the Fiscal Cliff announcement, I recommended buying Gold Futures with stops, and when the price allowed a stop-order adjustment to preserve gains, I recommended doing so. Each week since then, Gold Futures have given decent technical breaks to buy and follow the same strategy. This week I am not exactly thrilled about buying Gold anywhere between $1660 and $1680, which is most of last weeks overall range. It was obvious early last week that the objective in Gold’s quick rally was to fill the prior GAP on the chart (arrow #1) before correcting the entire move and more. A failure to post a new high for the week by Friday now leaves me only interested in buying Gold at one of three prices.
First, I would look for a drop to support around $1640 where two dominant trendlines intersect (arrow #2). If that support does not hold, the market may have another price in mind below at $1625 (arrow #3), which would fill the final GAP on the daily chart from last summers rally. A strong move below $1625 would have me questioning my overall bullish bias, so I am hoping we do not see such a drop. The final price that I would be interested in would be anything above $1700, confirming a breakout rally. I am rarely one to recommend chasing a market on breakouts, but action above $1700 will likely have the attention of many Gold traders and investors, so it is worth noting.
As always, feel free to contact me directly with any questions or comments regarding trading in the Futures Markets or if you have specific questions about the material in this report. I can be reached by email at
bb****@lo*************.com
or by phone at (888)272-6926.
Thank you for your interest,
Brian Booth
Senior Market Strategist
bb****@lo*************.com
888.272.6926
** 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.
