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Weekly Gold Report


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Gold posted its first weekly loss in five as an unrelenting rally in the stock market and a strong bounce higher in the Dollar have longs exiting their positions ahead of next week's
FOMC meeting and subsequent decision on rates. Gold has for the most part hung in there with this recent rise in equities, but as savvy investors realize both markets trending in the same direction is for the most part temporary.Ultimately theygo back to trading inverse of each other.Today the Dow and S&P posted a new all time highs while the tech heavy Nasdaq got crushed. For gold, today's downward price action which resulted in a $8.80 loss for the week was most likely due to the strength in the U.S.Dollar. August gold closed at 1271.4.The U.S.dollar firmed after the UK national election left no single party with a claim to power and leaves the Brexit andTheresa May's tenure as Prime Ministerin jeopardy going forward. As a result the British Pound gapped open lower and was under duress until the close which prompted a continuation rally in the greenback that started mid week. Of all the data points this week including the Comey testimony,there were no bullish surprises for gold. In fact the last two rallies near the 1300 level for spot gold over the last few months have resulted with a lack of buying conviction to push gold to trade andcloseabove 1300.0 an ounce. Silver exhibited the same type of price action this week as early week rallies were met with heavy selling. Silver lost 30.5 cents this week to close at 1722.0 basis July futures. We have previously noted thata rally in equities would be the biggest impediment for higher prices in gold and silver. Heading into next week's Federal Reserve monetary policy meeting, CME 30-day fed fund futures are pricing in a 100 percent chance of a rate hike. Clearly its priced into the market. While a known the trade will want clues if the Fed will raise a third and fourth time this calendar year. Should future economic reports reveal weakness similar to last Friday's disappointing jobs report, future rate hikes would be kicked down the road in my view. This would keep a lid on any rallies in the Dollar while put a bid back in the metals. It's important to note that gold has rallied following the last two rate hikes with sizable gains. Will this time be the third in a row? Watch the charts and key moving averages. If gold pulls back it must hold the 200 day moving average at 1252.3 and the 100 day at 1248.4. The 50 day sits at 1263.2 basis August futures. Failure here would result in a pullback to the 1220 area in my opinion.

Technicals for next week come in as follows. For August gold, support comes in at 1259.0 and with a close under 1246.8. Resistance is up at 1291.1 and with a close over 1311.0 the next resistance. For July Silver, support is down at 1700.1, and with a close under 1678.3 is next. Resistance is up at 1759.1 and with a close over here, 1796.5 is the second weekly resistance.

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About the author


Sean Lusk is a registered commodity broker and Director of the Commercial Hedging Division of Walsh Trading in Chicago. Sean began in the business as a runner on the trading floor during summer breaks from college in 1993. Upon his graduation from Southern Illinois University at Carbondale in 1996, Sean began his career on the trading floor of the Chicago Mercantile Exchange (CME). Overseeing billions of dollars of transactions working as a clerk in the Eurodollar pit, Sean took the next step and became a floor broker and member of the CME in 2003. He handled customer orders for banks and investment houses from all over the world from inside the Libor pit at the CME.

Now, at Walsh Trading, Sean utilizes his experience in the marketplace and his professional client service skills to aid and assist customers in their trading endeavors.  

He writes daily and weekly commentaries focusing on both the Precious Metals and Agricultural Markets along with related market activity.

Sean has been quoted in various media outlets discussing futures markets. 

These include:

 

  • Futures Magazine
  • Reuters
  • Forbes
  • Kitco
  • Nikkei Press
  • CCTV.com

 

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