Gold ETF Holdings Keep Shrinking
Today’s Spotlight Market?
Gold futures suffered heavy losses over the past 3 trading sessions since the FOMC terminated its asset purchase program. The end of quantitative easing surprised no one, yet the actual end date did set an extremely negative tone to trading. In yet another example of Fed doublespeak, the FOMC policy statement assured the public that rates will remain low for the foreseeable future and also dropped hints that the bank is pleased with the direction of the economy. The latter part certainly suggests that, at the very least, the Fed does not intend to add additional liquidity.
Fundamentals???
Fundamentally, the big story for Gold is ETF holdings, or lack thereof. SPDR Gold Trust holdings shrank to their lowest levels in over 6 years, which is a sign that retail investors are seeing less economic risk going forward. Tomorrow’s non-farm payroll report is expected to show the US economy adding 235,000 jobs last month. The unemployment rate is expected to remain at a 6-year low of 5.9%. As long as the US economy can continue to add jobs at this pace, traders can have a reasonable expectation that the Fed, at the very least, will stand pat in its policy. Taking into consideration that the ECB is expected to remain unchanged in its interest rate policy today, this may bode well for the US Dollar.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Gold contract dropping sharply after failing to maintain gains above the 1240.50 resistance level.? Price also failed to hold the 1192.90 relative low from October.? Yesterday?s close below support at 1150 suggests prices may test the 1100 level in the near-term.? The 14-day RSI indicator remains extremely overbought at 13, which could be supportive in the near-term.
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