Gold futures fell Friday snapping a four day win streak but still finished the week slightly higher. Economic data for the most part took a back seat to comments from Fed Governors and from the minutes release from the Fed’s last policy meeting. There has been a lot of chatter and quite frankly noise that a September rate hike could be back on the table warned a few Fed Governors this week. While some economic releases such as the latest monthly jobs report came in slightly better than expectations, it has been the slight recovery in some of the world’s currencies such as the Euro and British Pound that has incited some hawkish overtones from some Fed Governors.
The credit markets continue to tell a different story as despite some profit taking in the 5- and 10-Year note, and 30-Year bond Friday, remain bid up. This speaks to the reluctance of investors to acknowledge at least for now a rate hike in September as they are clearly not pricing one in. However traders may receive some more clarity on the issue at the Federal Reserve Symposium next Friday in Jackson Hole, Wyoming. At that meeting Fed Chair Yellen is likely to clarify her expectations for the pace of any future rate increases in a speech Friday August 26th.
In my view it’s this uncertainty that could have weak longs exiting positions ahead of Yellen’s comments next Friday. I wrote in last week’s report for traders to look for some back and fill on the charts concerning both gold and silver. This was due to the hefty overbought condition in both metals. From the latest commitment of traders report coming into this week Gold came in long by non-commercial and non reportable funds long 317K contracts. They came in long Silver over 94K.
Those are sizable longs in the market and with Gold’s inability to extend gains and challenge the July highs above 1380 basis December futures, I continue to look for back and fill ahead of the Yellen commentary. If those pullbacks are achieved, I look for them to be temporary. Downside targets include the 50 day moving average at 1335.0 and then the 100 day moving average and fifty percent retracement level at 1295.6 basis December futures.
Weekly Swing s GCZ 16 for the week of August 22nd through April 26th
Resistance#2- 1374.1
Resistance#1- 1360.1
Pivot- 1350.3
Support#1- 1336.3
Support#2- 1326.5