091116 – Waiting on Yellen

Model Portfolio: Short Signal (7/31)

CTM140916Technical Read: Gold managed an uptick close today, but that masked two intra-day rallies that just couldn’t take hold. I am attributing this to some lightening on the shorts ahead of a news event.  Maybe some stop hunting too. Momentum readings are still negative and the down trend remains in place.  Lower highs and lower lows, the classic downtrend definition.

Backdrop:

  • The room is quiet, as the rows of reporters suck in their breath awaiting Yellen’s first words from the podium. The Federal reserve Chairwoman brings a fist down and says, “Blankety-Blank, this is it, no more QE and we are raising rates!” What is the chance of this happening? Not very likely. Europe is showing signs of contraction and there is considerable fear that a whiff of deflation is a step away. Not to mention the political fallout from the Democrats possibly facing re-election and a market correction. Expect the status quo and the wilting of gold prices.
  • US Government Bond vs gold comments (status still available). US Government bonds made a show of a rally but it failed by end of day. The bond trend is pointing to lower prices. So the pecking order for now: bonds go down, interest rates go up, the US dollar goes up, AND gold goes down.

GH Garrett – Veteran Commodity Watcher for Conquer the Mummy.com

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