By Chris Becker
The gold (in USD) spot price closed up 2% last night – not really news in a volatile commodities complex where such moves are commonplace, but something may be afoot. Here’s last night’s action where gold pipped above $1600 for the first time in several weeks:
And here’s the longer term view, where the weekly price had broken its nearly five year trend (since the GFC low) in recent months, yet found support above $1500 USD per ounce:
Now, I canvassed a long or short breakout trade in gold (USD) in our inaugural “soft” edition of Macro Investor way back in mid-June (we did several unpublished editions before the hard launch to iron out any publishing/editing tweaks – its all there in the archive) and have been updating our subscribers as this trade idea hasn’t eventuated.
Which leads me to this next stellar chart which puts it all into perspective and why waiting is better than pulling triggers and hoping for something to happen.
It comes from a proprietary currency trader I follow on Twitter called “10 cents”. His blog is worth following and reading too:
If that’s not a clear en0ugh short term picture I don’t know what is! The “NFP” stands for non-farm payrolls from the US, the most closely watched financial macro indicator on the planet.
If it comes up weak again in early August, this may give the Federal Reserve all the ammunition it needs to starting pressing printing press buttons. Obviously, monetary commodities like gold will benefit from round three of Quantitative Easing (QE) – and this chart maybe the warning that that time is at hand.
Chris Becker is an investment strategist at Macro Investor, Australia’s independent investment newsletter covering stocks, trades, property and fixed interest. Each week Macro Investor publishes tables on the top ten most undervalued and overvalued stocks on the ASX. A free 21-day trial is available at the site. You can follow Chris on Twitter.