Gold traded a very robust $60.80 range this week as traders and investors tried to decipher all the week’s global economic data. The past few trading sessions have resulted in an avalanche sell-off forcing the price of Gold to drop from $1559.30 to $1498.50 per ounce. The August Gold futures contract settled at $1500.90 for the week. This Gold sell-off was much needed as the market has been technically overbought and it appeared the “BULL” market was running on fumes. However. I am not ready to declare the “BULL” dead and buried. A healthy market needs to “refresh” and “correct” in order to maintain its integrity.
Technically there is support between $1460.00 and $1475.00 and Resistance at $1560.00. The following are reasons why the Gold market experienced the choppy, volatile, and vast range.
Tuesday:
The Greek Parliament which will decide whether Greece will receive more bail-out funds from the European Union and the International Monetary Fund or defaulting on their debt. The Gold rally today was fueled by a weaker U.S Dollar versus the Euro today. Most analysts are fairly certain the vote will be positive. The austerity measures are extremely stringent and have forced the citizens of Greece to demonstrate against the strict measures.
Most analyst believe that the FOMC will leave interest rates unchanged.
Thursday:
The sell-off started overnight as traders and investors heard the uncertainty from the FOMC meetings regarding the United States economy “loud and clear” it is common knowledge to seasoned traders that “markets hate uncertainty”. Apparently the FOMC has backed off a bit from their view earlier this year and are not painting the same rosy picture.
The FOMC released statements as follows: “The labor Market has been weaker than anticipated”.”Inflation has picked up in recent months” and the Housing sector remains depressed”.
Thursday:
The sell-off was fueled early in the day session when news revealed the United States would spearhead an International effort to replace some of the Oil production lost due to the Libyan conflict. The U.S will release 60 million barrels of petroleum from its reserves according to the (IEA) International Energy Agency. This action shook the Crude Oil futures market causing the price to dip below $90.00 per barrel today…(August Crude Oil traded as low as $89.69 per barrel) more Crude Oil on the market pushes prices lower lower Crude prices are “bearish” precious metals – THIS IS THE LAW OF SUPPLY & DEMAND !!!!!
The Labor Department released the Initial Jobless Claims that were 9,000 worse than last week at 429,000.
The European Union Leaders warned Greece that there will be no further concessions, and they must pass the austerity plan as is. Once again a line drawn in the sand.
Today;
The sell-off continued as support resistance levels did not hold and triggered liquidation stop-loss and a short selling frenzy.
MY SWING NUMBERS / MONDAY 6/27
AUGUST GOLD
RESISTANCE # 2……………….$1537.00
RESISTANCE # 1……………….$1520.00
PIVOT……………………………..$1509.00
SUPPORT # 1…………………..$1490.00
SUPPORT # 2…………………..$1481.00
JULY SILVER
RESISTANCE # 2……………….$35.80
RESISTANCE # 1……………….$35.21
PIVOT……………………………..$34.83
SUPPORT # 1…………………..$34.24
SUPPORT # 2…………………..$33.86
Mike Daly / Gold Specialist
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