Futures Roundup
Gold Bulls Looking For Divergence
Fundamentals
Gold futures have held steady in recent sessions, likely in hopes that central banks may be more aggressive. Many traders are expected to focus on the parity, or lack thereof, between US and EU economic data. The ECB could potentially lower interest rates to the same level as the US if the group of nations fails to keep pace with the US. This week is loaded with US employment data for traders to digest, with the ADP payroll data on Wednesday, claim data on Thursday, and non-farm payrolls on Friday. The fact that ETF/ETN holdings of the metal have slipped can be seen as a negative if the trend continues, as funds have been a major catalyst of metal demand. If we see strong central bank buying of the metal, it may offset some of the negative effects of lower fund holdings.
Technical Notes
Turning to the chart, we see Gold prices consolidating into a narrower trading range, forming a triangle/wedge pattern. This suggests that a potential breakout may be on the horizon. Given the preceding move lower, there is a slight downward bias. However, if prices are able to cross the 50-day moving average and 1700 level on the upside, the market may gain traction. The oscillators are currently at neutral readings, as evidenced by the RSI hovering near 50 and momentum sitting near zero.
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About Mike Zarembski
Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.
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