Morning Gold Market Report The gold bulls have to be cheered by the capacity of the market to avoid a washout Thursday in the wake of US Initial Jobless Claims results that could have knocked down macroeconomic uncertainty. It should also be noted that US data yesterday morning could have given the Dollar a boost, instead the data resulted in a noted downside breakout in the Dollar that has extended into todays early action. Therefore currency market action might have been the primary force behind the recovery in metals prices during Thursdays trading session. The gold market enters the final trading session of the week in a positive fundamental and technical posture. Some traders suggest that gold was lifted by the steady monetary policy decision by the European Central Bank, while others suggested that threats from Russia regarding the potential for financial retaliation against the US, in the event of sanctions against Russia, provided the brunt of the run-up in gold prices yesterday. While the events in South Africa are currently just a sideshow for the gold market, seeing strong ongoing leadership from platinum prices might have added to the bullish mix in gold prices this week. In retrospect, the gold market might have seen some lift from comments by US Fed officials which seemed to suggest that low inflation pressures have allowed the Fed to remain patient with rates. In the end, seeing gold rally in the face of positive US economic data probably reduces the potential adversity in prices this morning in the wake of the US Non-Farm Payroll report. Limiting gold somewhat overnight were reports of long profit taking in Asia and news that gold derivative investments were unchanged yesterday. Comex Gold Stocks were unchanged at 7.133 million ounces. With gold seemingly able to transition away from a constant ebb and flow of safe haven interest, the bull camp stands a much better chance of withstanding a better than expected US Non-Farm Payrolls result. In fact, the bull camp in gold might have slipped into a win/win condition as softer than expected US data today might rekindle macroeconomic uncertainty, while something middle of the road might send the Dollar even lower and gold might see fresh new highs for the move as a result of the currency market action. While we favor the long side, we would suggest that traders use profit stops on long positions down at $1,322 in the April contract. Recent profit stops were suggested at $1,330 for April Gold, but that stop level probably needs to be expanded today, due to the prospect for increased volatility.
Posted on: Fri, 07 Mar 2014 14:02:49 +0000