Lack Of Clarity From Fed Minutes Benefits Gold Prices
Today’s Spotlight Market
It appears that speculators are starting to dip their toes back to the long side of Gold futures according to the most recent Commitment of Traders report. Non-commercial traders added over 4,600 new-net long positions during the reporting period ending on August 11th. This increased their overall net-long position to just over 32,000 contracts.? Non-reportable traders added over 6,800 net-long positions to reduce their net-short position to just over 7,500 contracts. Commercial traders are on the other side of the trade, increasing their net-short position to over 24,700 contracts.
Fundamentals
The Gold market has finally come back in favor by speculators, with prices rallying to 1-month highs on the belief that the Federal Reserve may remain in a holding pattern on interest rates past the September Federal Open Market Committee (FOMC) meeting. The Fed minutes from the July FOMC meeting were released on Wednesday, showing that some Fed officials were not in agreement that economic conditions both in the U.S. and globally were robust enough to begin raising rates. While a ?dovish? Fed in the past has been welcomed by the equity markets, it now appears that market participants are losing patience with the lack of clarity from the Fed and are now turning to so called ?safe haven? assets like U.S. Treasuries and even Gold. Gold had fallen out of favor with investors on the belief that the Fed would begin to raise interest rates this year. In turn, we have seen the value of the U.S. Dollar strengthen in anticipation of a rate increase. A stronger Dollar is bearish for commodity prices, as it makes them more expensive for non-Dollar buyers. Now it appears that many traders have thrown in the towel on trades that would have benefitted from a Fed rate hike, such as long the Dollar and short Gold and U.S. Treasuries. So now it remains to be seen if the recent rally in Gold is merely a bout of short-covering or the start of a bull move for the yellow metal.?????????? ?
Technical Notes?? -? View Today’s Chart
Looking at the daily chart for December Gold, we notice prices breaking out the upside following a moderate period of price consolidation. Prices are now back above the 20-day moving average and are trading above the previous resistance level of 1150.00. The 14-day RSI is strong, with a current reading of 66.50. The next major upside target appears to be the 200-day moving average, which is currently near the 1190.00 price level. Support is found at the August 18th low of 1108.50.?
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