Originally published by Chamber of Merchants
My account as of today, 4th November 2016, is -$15k AUD from my October balance which is currently $295k AUD. Follow me on twitter to get updates on my portfolio balance as well as real-time commentary on the market as the Merchant sees it. Not all tweets are strictly business, so bear with me as I share spotify tracks and comment on Bloomberg hosts and guests. Sometimes, they even comment back.
Gold+Dollar+Euro
Gold retraced all the way to about $1287. This was a probability mentioned in my previous post.
However, given some movement in the currency market, Gold, as I type this has recovered to $1300 USD. Once again, trying to trade in and out means that you’re very likely to miss the larger move because it’s just not possible to estimate the short term tops and bottoms. It’s not the Merchant way.
Here’s the economic data. A mixed bag, but still not a great time to be considering tightening monetary policy when the economy appears to be struggling under its own weight:
Although some of the numbers were concerning, the positive numbers still gave the market an attempt to rally the US Dollar (don’t ask me why… Buy the dump maybe?). Below you can see that the dollar is trying to bounce off the 97.26 mark. If it doesn’t hold (there’s still 3 hours left in US trading, then the Dollar can easily make a full throttle dive towards 96.50. This post will be out of date, but I’ll repost if anything is significantly different.
The Euro on the other hand took a slight knock around the time the UK judgement was made that Theresa May will need to employ a parliamentary vote before executing article 50. Keep in mind that the Euro had been rallying in the days prior so a pull-back is expected which would create the dead cat bounce support level for the US Dollar. The Euro has broken through its resistance so the probability of a continued Euro rally is high in my opinion. Remember, the US Dollar Index consists of a basket of currencies and the Euro comprises over 50% of the weight. Therefore a move in the Euro = a move in the Dollar = a move in Gold. At the moment, if the Euro moves up, so does gold.
The stock market continues to lose its footing as begins to test the previous supports from September:
Conclusion:
Remember, if you’re trading gold then you’re also trading currencies.
Tonight is the final set of USA economic numbers. It will send the trend of the rest of the month. The markets continue to test supports and the VIX continues to rise:
I can’t predict short term price movements, but I am confident that I will be exiting my trades well above the Gold price of $1400+ In the meantime we will experience volatility as the world struggles with the election and looming interest rates from the Fed (low probability).
ASX is likely to be negative with gold miners increasing in price.
I have patience. Do you?