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Gold Futures Testing 1300 Again

by Archer Financial Services | Jan 07, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

A new round of trade talks with the U.S. in Beijing are being held today and tomorrow.

President Trump said the trade talks are going well because China’s slowing economy is motivating them. The President said “I think China wants to get it resolved. Their economy is not doing well.” 

Also, there was optimism on news that this week's initial round of trade talks may include China’s top economic policymaker who is assigned with overseeing the trade negotiations. Previously it was thought that the talks would involve only "mid-level" Chinese officials.

The 9:00 central time December Institute for Supply Management nonmanufacturing index is expected to be 58.4.

It may take a while, but downward pressure on interest rates globally, but not from the Fed in the short term, will ultimately rescue this market.

It is better to trade other markets where the fundamentals are more lined up in the same direction, as is the case for gold and the thirty year Treasury bond futures.

 

CURRENCY FUTURES

The U.S. dollar is lower on the growing belief that the Federal Open Market Committee will halt its multi-year rate hike cycle.

Interest rate differential expectations are turning slightly against the greenback.

Last week, Federal Reserve Chair Powell said the Fed is not on a preset path of interest rate increases.

The euro is higher on mixed economic news. Euro zone retail rales increased more than expected in November, while German manufacturing orders fell more than anticipated in November.

Higher crude oil prices supported the “commodity currencies, “the Canadian dollar and the Australian dollar.

   

INTEREST RATE MARKET FUTURES

At 11:40 Atlanta Federal Reserve Bank President Raphael Bostic will participate in a discussion about the economic outlook and monetary policy in Atlanta.

In spite of the Federal Open Market Committee, at its December 19 policy meeting saying it plans to hike its fed funds rate two times in 2019, the financial futures markets believe the Fed may not be able to hike rates even one time in 2019.

Financial futures markets are predicting a 71% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year and there is a 27% chance of a reduction in the fed funds rate by 25 basis points. There is only a 2% probability of a rate hike.

Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures.

Continue to trade the interest rate futures from the long side.

Gold futures are testing the psychological resistance at the $1,300.00 level. 

Gold is likely to continue to advance in the longer term.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2518.00      Resistance    2555.00

 

March 19 U.S. Dollar Index

Support    95.150        Resistance    95.800

 

March 19 Euro Currency

Support    1.14630      Resistance    1.15500

 

March 19 Japanese Yen

Support    .92500        Resistance    .93210

 

March 19 Canadian Dollar

Support    .74750        Resistance    .75170

 

March 19 Australian Dollar

Support    .7115          Resistance    .7162

 

March 19 Thirty Year Treasury Bonds

Support    146^20       Resistance    147^24

 

February 19 Gold

Support    1281.0        Resistance    1302.0

 

March 19 Copper

Support    2.6300        Resistance    2.6650

 

February 19 Crude Oil

Support    48.02          Resistance    49.68


For more information about these markets, please contact Alan at 312.242.7911  or via email at alan.bush@admis.com. Thank you.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff.  Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.

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