A Gold Moment: August 21, 2014
Moral suasion is one of the Fed’s most powerful tools. Gold traders and money managers are so hungry for a return to higher rates that the simple mention of the potential in the FOMC minutes was enough for a strong market reaction. Gold prices began slipping earlier in the week, along with other commodities, on the strength of the USD. This strength came from the positive economic reports bolstering the trust in Fed actions. As the release of the minutes approached, this confidence grew and set the tone for stronger US equities with less need of a safe haven. Higher rates are in such high demand that just talk of them gets market participation. Traders now look forward to any new policy statements coming from Janet Yellen or any other central bankers in Jackson Hole Wyoming.
The geopolitical picture is still in the backs of trader’s minds. As long as they remain isolated to their geography the effect on money flows is expected to be limited. This is with one exception. That is the growing economic sanction war between the west and the Russians. These moves are believed to have impact as time marches on. Until that impact is better understood, markets will trade with disregard.
Technically, bears rule the roost. Prices triggered a wave of sell stops this morning hitting the target of 1271 sooner than expected. Short term charts are now oversold as spot gold dropped too far too fast. Upside resistance sits at 1288, 1292 and 1300. The more likely downside numbers are 1272, 1266 and 1258.
ETF: GLD Deposits: 800.08 tonnes +0.89
Comex GC O.I. : 366,401 -1501
ETF: SLV Deposits: 10,272.89 tonnes +44.87
Comex SI O.I.: 164,893 -159