#$gc_f

As widely anticipated, the Fed did not change its target rate today. Instead, the Fed set the stage for cuts possibly later this year. Overall, the market’s response was a choppy climb to a modestly higher close. A more enthusiastic move by the market may have occurred if the Fed cut rates. Gold’s reaction was more favorable, finishing the day higher by over 1%. Generally, the lower interest rates go, the more desirable gold can become as lower rates typically result in a weaker dollar.

Gold tends to post seasonal bottoms in late June or early July (shaded in chart below), as demand increases when jewelers again stock up ahead of the seasonal wedding event in India. Gold prices are also subject to spikes in demand from the investment community, as a hedge or protection from concerns over inflation or during times of economic instability or uncertainty. It is valued in terms of the U.S. dollar, so periods of dollar weakness can support gold’s value. Uncertainty over trade and tariffs does exist and has existed for some time now. During this time inflation (official metrics) has remained subdued while gold has been trending lower. The trend of lower gold is likely to continue.

Seasonally, there is a weak price period for gold from late-February until late June or early July. Entering a short position on or about February 20 and holding until March 15 has been a successful trade 27 times in the past 44 years for a success rate of 61.4% with a cumulative profit of $45,140 per futures contract. However, in recent years holding onto the short position established in February longer has been the more profitable trade.

Gold speculators have gone net-short for the first time since near the beginning of the last bull market.

If rallies are born on skepticism, we may be about to see a gold rush. At least, that is an inference some are drawing from recent figures from the CFTC on trader positioning in gold futures. That’s because, as of 2 weeks ago, Non-Commercial Speculators adopted their first net-short position in 16 years.

The last time Speculators were net-short was exactly 16 years, in August 2002. Of course, that was also around the time that the last bull market in gold was getting kick-started. Over the subsequent 10 years, the metal would go on to jump 500% from those levels.

So are we about to witness another gold rush? In a Premium Post at The Lyons Share, we tell members how we use this CFTC data, including what it implies -- and what it doesn’t imply. We also look at some of the key levels to watch as potential support in the gold complex.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. FYI, our Pre-FALL Sale (25% OFF) is going on now  so it’s a great time to sign up! Thanks for reading!

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Although the historic summit between President Trump and North Korea leader Kim Jong Un captured the headlines today, the Fed also began a two-day meeting. Latest data from CME Group’s FedWatch Tool indicates a 95.0% probability that the Fed will increase rates tomorrow by 0.25% to a new range of 1.75% to 2.00%. Generally, the higher interest rates go, the less desirable gold can become. Gold does not have a yield and typically storage of physical gold has a cost. However, any weakness in gold in June could prove to be a good buying opportunity for a short-term trade.

The popular gold-based exchange traded product, “GLD”, is testing the Down trendline from its 2011 peak.

I think most participants would likely characterize recent markets as exciting — or, at least, interesting. That’s because, despite historically depressed volatility indices, there has certainly not been a lack of movement. Stocks are soaring, bond yields are jumping, the U.S. Dollar is plunging and oil prices are climbing. And that is to say nothing of the new crypto-currency asset class which, depending on what time you look, is either melting up…or crashing.

One of the few assets not partaking in this wild ride is precious metals — somewhat ironic given the level of passion and excitement that the asset class usually incites. In reality, the price of gold, as measured by the popular exchange traded product, the SPDR Gold Trust (ticker, GLD), began the year smack dab in the middle of basically a 2-year trading range. And the GLD hasn’t moved more than about 10% above or below that mid-point during that time. You can say essentially the same thing for the price of silver, as determined by the iShares Silver ETN (ticker, SLV).

Gold bugs might just get their opportunity to finally move the needle here soon, however. At least, they have a potential catalyst close at hand, based on the chart of the GLD. How so? The fund is presently testing the Down trendline stemming from its 2011 all-time high. Should the GLD be successful in breaking out above that trendline (presently near ~127), it may open the way for further, perhaps considerable, gains in the near-term.

It is a similar chart story with the SLV as it too is testing its own post-2011 Down trendline near 16.25 after bouncing off of its post-2008 Up trendline in December.

So, after drifting through multi-year doldrums following a potential longer-term bottom in early 2016, precious metals finally have a chance to join in the excitement of the rest of the world markets. If GLD and SLV are able, again, to overcome their respective long-term Down trendlines, they could be off to the races in putting in that long-awaited next up-leg following their 2016 rallies.

Of course, the developing potential breakdown in the U.S. Dollar Index may well serve as a tailwind for precious metals in their attempted flight higher. If the DXY cannot hold or reclaim its recent lows, it runs the risk of potentially meaningful further losses. If so, there’s no guarantee, but such a development would presumably aid in the precious metals’ breakout attempt.

If you are interested in the Premium version of our charts and research, check out “all-access” service, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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Gold prices tend to move up prior to the holidays, and the trend worked especially well from 2000 to 2011. Seasonally speaking, it is best for traders to go long on or about the thirteenth trading day of November and hold for about ten trading days. Over the last 17 years, this trade has worked 13 times for a success rate of 76.5%. The longer-term history of this trade is not as good, nonetheless profitable. Gold has had a respectable year, up 10.8% as of today’s close.

After briefly breaking above $1350 in early September, gold quickly retreated back under $1300. It appears to have found support just above its 200-day moving average. But, it has also been struggling to reclaim $1300 and hold above. Stochastic, relative strength and MACD indicators are mixed. Stochastic indicator is negative, relative strength was trending higher until today while MACD is still holding onto a positive signal. Seasonal strength could give gold the boost it needs to break out above $1300.

Gold fund GLD is (again) challenging its post-2011 Down trendline.

It’s no secret that gold has had a tough decade. Yes, the metal put in a potential key bottom at the end of 2015. The prior four years, however, saw the metal nearly cut in half. Even after a 2-month approximately 20% pop in the price of gold the following the 2015 low, the metal has gone nowhere. Indeed, 16 months later gold is exactly where it was in February 2016.

From a technical perspective, the main culprit in holding prices back over the last half dozen years has been a Down trendline stemming from the 2011 highs. On a longer-term chart, particularly one that has seen such a large move in prices, we would typically prefer a log scale chart for analysis. However, a linear chart has been extremely useful in identifying key points of resistance over the last six years. For example, the trendline put an end to rallies in October 2012, July-September 2016 and in mid-April of this year.

Gold bugs have another opportunity at their hands, though, as gold is once again testing its 6-year Down trendline. Using the SPDR Gold Trust ETN, ticker, GLD, the trendline is currently just above the 121 level.

Now, breaking this trend line does not guarantee that gold is off to the races again. However, removing this 6-year old source of resistance would not be insignificant in opening up an easier path to the upside. In the GLD, we would look for immediate-term upside to the 125 level, and then to the summer 2016 highs near 130.

Of course, we don’t like to anticipate breakouts. Thus, we must assume that the trendline will hold again. If it does, the GLD it looks destined to remain, for now, in the range it’s been in for literally four years now. In that scenario, it still looks to have potential downside to the 110-112 level

If you want an “all-access” pass to our charts and research, we invite you to check out our new service, The Lyons Share.

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