Breaking News

Gold Awakes? Fed Brakes?

By Mark Mead BaillieCommoditiesJul 16, 2017 07:39AM ET
Gold Awakes? Fed Brakes?
By Mark Mead Baillie   |  Jul 16, 2017 07:39AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Gold Scoreboard
Gold Scoreboard

Welcome to the 400th consecutive Saturday penning of The Gold Update, double the number we'd intended to write until you cherished readers reversed our intent for "Gold 2000 or 200 missives, whichever comes first" to "second."

What unconscionably has yet to double -- and beyond -- is the price of Gold to the above scoreboard's level of 2691, let alone get anywhere even near the 2000 mark, the lowly highlight of the past three years being 2016's return up to Base Camp 1377. Worse, as the above price track shows, today at 1228 Gold is 110 points (-8.2%) below where 'twas at this date a year ago. One can either read it and weep, or better, Gold go and reap, for in the long haul to buy down here is ever so cheap.

'Tis especially true when Federal Reserve Bank Chair Janet Yellen, just a week ago having ruled out there being another major financial crisis "in our lifetime" ... followed up such conclusive comment on Wednesday with this 180° whirlabout of wisdom: "Let me state in the strongest possible terms: I agree ... current spending and taxation decisions ... [are] ... going to lead to an unsustainable debt situation, with rising interest rates and declining investment ... that will further harm productivity growth and living standards."

We all know the Fed is behind the curve, but they're just figuring this out now? Then add on International Monetary Fund Managing Director Christine Lagarde stating that "financial vulnerabilities present an immediate concern”, and the price of Gold today ought be as fat, dumb and happy as ever. Instead in turning to the weekly bars for Gold, we find it rather waifish, stumbling along a dark, puddled back alley, cold, frail and unwanted in having recorded a "lower low" for the fifth week in-a-row:

Weekly Gold Bars & Parabolic Trends
Weekly Gold Bars & Parabolic Trends

To be sure, Gold did net a gain 16 points for the week, settling yesterday (Friday) at 1228; but to put that into perspective as to just how gloomy 'tis all been in recent months, 'twas only the second-best net up week for the yellow metal in the past 13! And then from here come all of those annoying overhead "Oh-Nos!", most notably the 1240-1280 box to which Gold just had said "adios" in heading further south a mere week ago.

Even more broadly as we next view Gold's daily closes from its All-Time High of almost six years ago, you can see that life of late above the 300-day moving average has been but brief. Moreover, we've not forgotten that last year's low came on the first trading day, as is thus far the case this year, but never in the post-Nixon era has such ultimately occurred in back-to-back years; so even if just a statistical anomaly, this year's Day One low of 1147 (the red line at lower right) remains vulnerable:

Gold Daily Chart
Gold Daily Chart

Such dourness notwithstanding, is Gold's price finally awakening in anticipation of a Fed rate hike braking? Friday's release of the negative growth in June's Retail Sales along with a zero-growth reading for the Consumer Price Index sure got Gold fired up. The COMEX Gold futures typically average trading volume of less than 100 contracts per minute over each session's 23-hour trading period. Yet upon those economic data releases yesterday, in a single minute more than 10,000 contracts traded. But wait, there's more: of the 2,831 trading hours for Gold year-to-date, price's 12-point rise in that data release hour was supported by the fourth-strongest hourly up-volume so far in 2017. One ought think that carries significant buying weight beyond simply flicking off Shorts like flies.

'Course such news also made the stock market happy, the Great Divergence between the overly crash-ready S&P 500 and the Economic Barometer appearing as stark as can be:

Econ Baro
Econ Baro

One ought well think the Fed, whilst they're never ahead, is cognizant to some degree of where the above Baro's being led. That, in turn, ought have them hit the rate hike brakes, their 26 July policy statement just eight trading days away. As for Gold's awakening, one of our favourite signals -- the "Baby Blues" -- are coming into upside play, per this end-of-day alert which popped up yesterday...

Signal spawned by this next graphic. On the left we've Gold's daily bars for the last three months-to-date, the blue dots of 21-day linear regression trend consistency just now perceptively beginning to curl upward. Should the reliability of the dots' sweeping moves in recent months continue to play out, we'll see Gold make a run well back into its 1240-1280 box to that clustering area you see 'round 1250. On the right are Silver's Baby Blues which on their down run never reached below the preferred -80% line, but ought nonetheless benefit should Gold get into upside gear through here:

Gold & Silver 21 Day Linear
Gold & Silver 21 Day Linear

As to trading the precious metals near-term, here we've the 10-day Market Profiles for Gold (left) and Sister Silver (right), still showing that fat-fingered (or otherwise) trade trough from a week ago. Note that the yellow metal is presently ahead of its most commonly traded price of the last two weeks (1223), whilst the white metal sits right upon hers at 15.90:

Gold & Silver 10 Day Market
Gold & Silver 10 Day Market

This being a milestone edition of The Gold Update, indeed let's update two items from last week's missive on the unlikely chance you missed it. First we've again The Stack now as follows:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2691
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
Gold’s All-Time Closing High: 1900 (22 August 2011)
The Final Frontier: 1800-1900
The Northern Front: 1750-1800
On Maneuvers: 1579-1750
The Floor: 1466-1579
Le Sous-sol: Sub-1466
Base Camp: 1377
2017's High: 1298 (06 June)
The Weekly Parabolic Price to flip Long: 1295
Neverland: The Whiny 1290s
The 300-Day Moving Average: 1260 and falling
Trading Resistance: 1243
"The Box": 1240-1280
Gold Currently: 1228, (expected daily trading range ["EDTR"]: 13 points)
Trading Support: 1223 / 1210
10-Session “volume-weighted” average price magnet: 1222
10-Session directional range: down to 1204 (from 1248) = -44 points or -4%
2017's Low: 1147 (03 January)

Second we've again our millennium-to-date "most important Gold graphic" tracking the StateSide money supply as measured by M2 along with the price of Gold. As pointedly discussed last week, Gold has ceased its logically regressing to the track of M2, such that the next time they meet -- which is way overdue -- price will be well above and beyond "The Big Two":

M2 Supply & Gold Actual
M2 Supply & Gold Actual

Our sincere and sizable thanks to all of you highly-valued readers, linkers, publishers and broadcasters who've stayed this nearly eight-year course with us. Gold will win the battle for 2000 and we'll be here with you when it happens!

Gold Awakes? Fed Brakes?

Related Articles

Gold Awakes? Fed Brakes?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email