Gold – Profit Taking into Christmas
Commentary for Friday, Dec 21, 2018 – Gold closed down $9.80 at $1253.80 in typical holiday trading. Looks like a bit of profit taking for gold into the long Christmas weekend. The dollar was also stronger helping push gold lower with the Dollar Index moving from 96.25 through 96.75. The background noise with Trump/Mattis and the possible shutdown is not creating much of a stir with traders but they still respect that safe-haven buying.
The DOW seems stable today around 22,800.00 so volatility may be subsiding. I still think this latest bearish mood for stocks in both Europe and the US is overdone – it has however helped support gold. Of course this is a two-edged sword – further weakness would help safe-haven demand but a turnaround might lead to further profit taking with gold traders.
All in all I expect pricing in the metals to remain quiet through next Tuesday with Christmas in place but beware of the Grinch – most traders have already left for the holidays but those remaining could create mischief with computer selling or buying. Should this happen discount the rumor and watch things get back to normal by the middle of next week.
Towards year end it looks like gold is consolidating around $1250.00, which is solid but there is plenty of work ahead for the growing number of bulls. That region between $1250.00 and $1350.00 is no man’s land and the higher number has been a busted flush for more than 5 years.
These higher gold price possibilities are on the table because the mood of this market has brightened, the FOMC rate hike is behind us and perhaps the Fed will turn a bit dovish in 2019. But we all know that sentiment changes with the wind so keep your powder dry.
If you are looking for wishful thinking consider the possibility that by 2020 the Fed will be lowering rates to combat an economic slowdown which some believe has already begun.
I don’t think so but should this be the case gold prices would likely push to $1400.00.
A number which no one would have even considered a year ago and the big psychological lift the physical market still needs to renew fresh speculative money.
This bullish mood is not only in place short term but I think will extend into next year especially if gold holds its 200 Day Moving Average ($1252.00). As always expect bouts of despair as profit taking looks like it will spoil this party but keep your eyes on the longer term.
Gold has already awakened – it’s not going anywhere and will become more important to everyone as soon as they realize this latest interest is not just a flash in the pan but the result of a world getting more and more mixed up as to which way is up.
Wishing you all a wonderful holiday season and a blessed New Year. We will be closed the 24th and 25th for Christmas and the 1st and 2nd for the New Year. This has been a tough year with Kenny’s passing but we are grateful for the Lord’s mercies and blessings! So all of us at CNI take a minute, bow our heads and wish you and your families a safe and joyful holiday season.
This from Zanere (Chicago) – “While the gold and silver markets showed impressive action yesterday, sentiment has been reversed this morning and the setback in prices is significant. Apparently the dollar has rebounded enough to spark profit-taking and there might also be a measure of deflationary concern trickling back into the commodity equation. While it appears as if gold and silver returned to a position of benefiting from safe haven this week (that is a deviation from the recent past) the threat of a US government shutdown adds to global economic headwinds. Obviously fears of slowing tempers physical demand hopes and in turn puts a bigger burden on investment demand to carry the bull case. Fortunately for the bull camp GLD holdings since October 9th are up 41.6 tonnes which is a gain of 5.7%. However, total gold derivative holdings overnight dipped slightly from the prior session. In the end, the most important force for the bull camp is further weakness in the Dollar and despite the initial Dollar bounce today there doesn’t appear to be a reason to call for an end to the recent slide in the Greenback.
Obviously the PGM markets this week continue to feel the pressure of deteriorating macroeconomic conditions as they came under pressure yesterday in the face of very positive gold leadership with the palladium market at times down by $23! While the palladium market has consistently surprised the trade with its resiliency, it now feels as if a reversal in long palladium/short platinum spread positions is unfolding. It is also possible that the palladium market is simply poised to fall back and correct. Clearly some weakness in palladium this week is justified by the deterioration in overall economic sentiment and that could mean this week’s high is the high for the year. Uptrend channel support and a key pivot point in March palladium today is seen down at $1,169.90 with a potentially important moving average also seen down at $1,166.20.”
Silver closed down $0.17 at $14.58.
Platinum closed unchanged at $794.60 and palladium closed down $23.10 at $1207.70.
Our Patented Employee Survey – Gold’s Direction Next Week?
Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 6 believe gold will be higher next week 2 think gold will be lower and 1 thinks it will be unchanged.
Our Patented Customer Survey – Gold’s Direction Next Week?
Like the employees, our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 64 people thought the price of gold would increase next week 31 believe the price of gold will decrease next week and 5 think prices will remain the same.
Precious Metal Closes & Dollar Strength – Dec. 17 – Dec. 21
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