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Weekly Gold Report


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Both gold and silver took it on the chin this week as long liquidation mostly by speculative longs was the theme for the week. The majority of the losses were seen after the FOMC rate decision Wednesday afternoon.On Wednesday, the Federal Open Market Committee kept the benchmark short term interest rate at unchangedwhile announcing that it still plans to raise rates at least one more time this year. The central bank also said it will begin shrinking its $4.5-trillion balance sheet in October. For the week December gold lost $27.50 to close at 1297.5. December silver lost .72 cents to close at 16.98. Certainly a more hawkish tone on rates was the catalyst for the selling this week. But to put things in perspective this market has staged a huge rally since July 10th rallying from 1204 an ounce to 1362.4 in just over two months. Seasonal buying,weak economic data, and geopolitical safe haven buying were three of the reasons for the impressive rally. Because of the ramped up war rhetoric into the weekend, Gold sits at just above 1300 an ounce as of this post. Recent shorts in the market cover their positions just in case the North Koreans test another missile over the weekend which may prompt a response this time for the U.S, South Korea, or Japan. Should tensions ease next week with North Korea, look for gold to test a fifty percent retracement of the third quarter rally. This level sits at 1284.4. A close under here and the shorts will target the 100 day moving average at 1269.6 basis December futures. Resistance sits first at weekly pivot at 1304.2 and above there at 1317.2. A close above 1317.2 and the market will push to 1337. December silver experienced the same sort of safe haven buying in the 3rd quarter in my view. Futures rallied from 15.16 in early July to a recent high up at 18.29. A fifty percent retracement sits at 16.73. This weeks break sent the market below the 200 day moving average at 17.12 and the 50 day at 17.03. The 100 day sits at 1685.5. Aside from the North Korean situation, traders will be looking atthe final U.S. Q2 GDP release and Personal Consumption Expenditures (PCE) index, scheduled for publication on Thursday and Friday, respectively.Sundays election in Germany is also an important event to keep an eye on, even though no surprises are expected. German Chancellor Angela Merkel is the favorite to win against Social Democratic chancellor candidate Martin Schulz. If Merkel wins, it will be her fourth term in power.

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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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