Gold’s Ideal Setup, Central Banks Tethered to Zero or Negative Interest Rates

June 21, 2019 12:30 PM
Ideal Trade Set-up for Gold futures
Federal Reserve is expected to cut rates in July
Global Central Banks tethered to zero or negative interest rates
Gold Market Update

Gold Market Update

Gold Futures (August)

Yesterday’s close: Settled at 1396.9, up 48.1

Fundamentals: Gold has traded above $1400 for the first time since September 2013 and the metal is breaking out above its 5-year ceiling as the Federal Reserve is expected to cut rates in July. The Dollar Index has lost about 1% on the week and the U.S 10-year Treasury note is flirting with 2%. Adding support to commodities in general is a strengthening Chinese Yuan as President Trump and President Xi are expected to meet at next week’s G-20 Summit; the Yuan has gained nearly 1% on the week. Fueling the broader narrative for Gold while the Dollar weakness is that although the Federal Reserve was able to lift its Target Rate to 2.25-2.50, other central banks are still tethered to zero or even negative with sovereign debt edging deeper into negative territory. This is Gold’s ideal landscape.

This week, both NY Empire State Manufacturing and Philly Fed Manufacturing both whiffed. Flash June PMIs are due at 8:45 am CT.

Technicals: The landscape has become as bullish as it can be. Does this mean you should chase Gold up here? Absolutely not. Typically, when everyone is screaming for it, that is when you should be capitalizing on already being long. There will be pullbacks for those who are patient. For now, while the bulls eye a psychological achievement by closing above $1400, the tape remains immediate-term bullish above ...  

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