The Fed walked a tightrope once again yesterday and today’s economic data missed slightly with May’s Core CPI at of 1.7% down from April’s 1.8% but we did see an improvement in Initial Jobs Claims down 12k to 267k.

Gold bullion in the vaults at the Bank of England Credit: NewsCast +44 (0)20 7608 1000 No archiving

Add in the dollar index pushing downward by 0.7% to 93.82 a level not seen since mid-May due to the Federal Reserve’s revised its growth forecast for the U.S. economy as well as it projection for interest rate pushing the idea of rate hike toward end of the year. Albeit both hawks and doves could find something in the Fed statement or comments to highlight their view point.

Now add in the all headlines surrounding Greece and its looming deadline for its payment at the end of the month…there is one place I want to revisit and start to look for a trade setup.

Gold typically does well with a looming crisis as well as a weaker dollar (remember gold is priced in U.S. dollars) add the two together and it is no surprise gold is moving higher.

As wrote earlier gold has been in a trading range for some time now. With today’s move of 2.37% it put price towards the high end of the channel.

I want to be nibble here. I want to look for either weakness at the top of the channel and sell premium in the GLD (quote) options or if we see continue strength and possible breakout of the channel then I want to be long options in the GLD. In today’s GLD price action we did see price trade above the June 1 high touching the 150 day moving average and lost momentum for the time being. We are in a wait and see mode. Unless you were long gold yesterday let see were price takes us.

Tagged with:

Leave a Reply