Gold Trades Lower on Hopium, Dollar Gains One Percent

FX:XAUUSD   Gold / U.S. Dollar
Go long on "optimism"

Traders are more “optimistic” in that everything will work out – from rate hikes to Greece – and risk continues to bid higher on the news, or no news as it were.

Greece is said to be saved after Prime Minister Alexis Tsipras gave into the troika and EU on a bailout extension. The game theorists got.. played?

However, the International Monetary Fund managing director, Christine Lagarde, said there was still a lot of work to be done. Perhaps the greatest feat is to propose the bailout extension to Greek lawmakers, which many believe will shoot it down (i.e. progress towards no progress).

Blowhards out of the Fed continue to spew rate hike rhetoric as if they have a shred of credibility anymore. How many years has the Federal Reserve boasted about a strengthening economy and the path towards monetary normalcy? It can be described – at worst – as verbal diarrhea.

Today, Fed Governor Jerome Powell said not only will there be one rate hike but there will be two! Keep in mind, myself and my colleagues have been voicing the Fed’s inability to raise rates for a very long time. We were front-runners, as it were, long before mainstream analysts and economists began to jump on the no hike bandwagon.

Nevertheless, in volume-less markets, hopium went bid pushing the dollar up over one percent on the day right as the Fed Governor said there was stability in the dollar.

The real gem came when Powell said there were no asset bubbles, but that is expected. The Fed had absolutely no clue the Great Recession was about to grip the world. Even several months into the recession, Ben “there’s no housing bubble” Bernanke thought the growth trajectory would continue upwards.

If the market would juxtapose Powell’s comments with Fed Chair Yellen’s post-FOMC comments, there would be a crystal clear imagine of confusion. Yellen bluntly stated that both economic and inflationary data DID NOT meet requirements for a rate hike and that further improvement would be needed.

After trading slightly above $1,200 per toz., gold             has retracted quite quickly, currently trading at $1,177.90. Technically, price action could find support within these levels, but that largely depends on the dollar’s performance and rather or not the optimistic perception continues to go bid.

Gold             remains in the large trading range and has no real direction. If prices continue to breakdown, expect the yellow metal to seek out trend support at $1,168 with deeper support at $1,152.

Upside potential could be capped at $1,188/92 before a retest of $1,200 can happen.

Feel free to contact me or check out my work:
Twitter: lemieux_26
stupid range ^_^
+1 Reply
Muy stupido lol. It's kind of humorous to watch. Gold increases on real events like horrendous economic data or geopolitical tensions, but plummets on the words - not real substance - of central bankers that everything will be ok.

Take the Greece debacle. Nothing has actually happened. No deal has passed, but markets trade as if were. Mean reversion will be nasty.
+1 Reply
jangseohee CommoditiesTrader
the grease debacle is liken to fast & furious but sequel number 30 ^_^
You are paying too much attention to then news. News = noise. The best thing you can do is turn off the tube and trade based on price and price history only. Gold had terrific gains. As is always the case - terrific gains are followed by terrific losses. Think ocean waves - they roll in break apart and roll out, market is no different. The life goes on.
I know what I am doing, and I have wrote about gold for quite some time. I wasn't giving a "buy, buy, buy" recommendation but merely recapping why prices were down. Those that trade - not buy and hold - do so off of day-to-day events.

That's what one does when writing articles :D And yes it is good to allocate into gold!
+1 Reply
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