News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Update

Fed Brings out The Whipsaw

December 14, 2023 - (GoldMarketWire.Com) - The Fed decided to hold rates for the fourth time in a row at yesterday's meeting, and the Metals turned on a dime and headed back up. Here's the pattern, for your perusal:

...the run down.

Immediately, the precious metals complex reversed its recent sell-off. Volatility is the name of the game. Perhaps even more important was Jay Powell's intimation of 3 rate cuts next year. That's a lot to digest, to be sure. The smell of Washington and the election cycle is in the air.

Silver had stopped right where expected, and we were predicting  a nothing burger until the end of the year. What we got was the complete opposite. 4%+ upside action yesterday, and a follow through today.

uptrend worked as lift-off point.

Well, the trend line worked well, even if the market wasn't what we expected. The clearing of our major downtrend line is a favorable factor for the bulls.

Gold performed with a similar fervor.

a 3% low-high yesterday.

These kind of gaps usually portend a decent follow through. But we must cast a suspicious eye nonetheless, on the proceedings. We turn to the long-term weekly for a new view:

the BIG horizontal picture for Gold (weekly chart)

Look at where we've stopped. Right on the major, long-term (or intermediate if you like) resistance line. So while the follow through is impressive today, we must remember that this is a move in the run up to Christmas.

Book squaring, fun and games, market shennanigans, all play a part at this time of year. We could really just envision a massive run up now, to try and get the market to print at or near $2100 for the all-important year end close...just to watch the metals get crucified at the beginning of next year. There is something "funny" about the market proceedings and we don't like the posture. We have no trading position as noted here over the past week, and we dropped our length when the the uptrend started to get violated. That worked well, as we avoided the Friday and Monday blowout.

The first order of business will be to get a weekly/monthly close above that long-term horizontal, and then we will reassess. While it cannot be doubted that the market has done a remarkable volte face here - we won't chase strength. If we start to print regular weekly closes above $2100, then we will reassess, but for now - we hold the core like iron and keep the trading book closed. If we miss the action between here and $ be it. No one is always right, but damage limitation is always important. For those who think rate cuts are always fuel for Gold we implore you to peruse the history. After all, we've taken on roughly 25% in the past 14-months; all in the face of increasing rates. Do Treasuries and Gold rise and fall together? Do the 1970s have a lesson to teach?

We will stay on the sidelines, with an interest in the close above the horizontal on the weekly chart. Short spec idea has been shelved, although the wild-eyed gamblers could consider a small one around here, especially if we don't get through the horizontal on Friday's close.

Nothing is "rotten in Denmark"... but our 'nose' has been irked.

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