Both gold and silver experienced a huge price drop in trading today. Gold futures base the most active December contract lost $ 78.90, a total decline of 3.92%, and is currently set at $ 1934.20. Silver had a larger percentage gain of 4.77%, down $ 1.34, with the September futures currently fixed at $ 26,735.
Although a percentage of the current decline in both gold and silver was directly attributed to dollar strength, the vast majority of today’s decline is the result of market participants and traders selling both precious metals and taking them lower.
Spot as physical gold lost 3.68%, which is a decrease of $ 73.63 and is currently fixed at $ 1928.30. We can see the two components that took gold lower today by looking at the KGX (Kitco Gold Index). The screenshot in this article was taken at 16:59 EDT when spot gold was set at $ 1727.90, indicating a current price of $ 72.40. Upon closer inspection, we can see that $ 56.80 was the result of traders liquidating or selling positions, with the remaining drawdown of $ 15.60 a direct result of dollar strength.
The release of last month’s minutes from the Federal Reserve’s FOMC meeting indicated that Fed members did not see the benefits of implementing a so-called yield curve check, which made it highly unlikely that the Federal Reserve in the very future would interest rates. Fed members told central bank officials in late July that they would lower their estimates for economic growth in the second half of the year.
When today’s minutes were released and analyzed, the information was seen this very supportive of the US dollar, making the dollar index higher by + 0.83%. Considering that gold futures gave up 3.92%, simple math discovers that a little more than 3% of the current decline was directly attributed to selling pressure.
As reported by Neils Christiansen, editor of Kitco News, Adam Button, chief currency strategist at ForexLive, said, “The gold market wants to see clear control over yield curves,” said Adam Button, chief currency strategist at Forexlive.com. a bit has been done, but the markets clearly have a gun to the head of the Fed. They want nothing more than to press. he quoted that time and time again the Federal Reserve has shown that it will do whatever it takes to support the US economy.
On a technical basis, it seems clear that after hitting the new all-time record high at $ 2088, traders observed a market that was temporarily buying and began selling at current prices. The first leg of this correction took prices to $ 1875 before recovering, and completed the first “A” wave of an A, B, C correction. Typically, the be wave is a counterwave that moves in the opposite direction of the current trend and will typically pick up 50% to 75% of the price drop during “A” wave. Gold traded up to $ 2025 before ending the “B” wave and entered the final “C” on Friday, which, as concluded, will complete the correction.
Our studies indicate that sales pressure could continue and the most logical price points to look for support are $ 1875, if $ 1846. The first number is derived from what is termed a flat ABC correction, which means that the low of the “A” wave equals the low of the “C” wave. The last number of $ 18 $ 46 was derived from the 38% Fibonacci retracement of the very large leg of the rally which started at $ 1450 and concluded at $ 2088.
While it is quite possible that we will see more disadvantage in gold, it is also very plausible that once concluded we will introduce a final fifth wave, which will take gold prices to a new record high.
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Wish as always, good deal,
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
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