Gold/Silver: The Powell pump and your next buying opportunity

Let's jump right into this article with some key takeaways from Federal Reserve Chairman Jerome Powell's Jackson Hole summit. There were two statements and a comment that I had highlighted in my notebook. The first was how he cautiously stressed not making an "ill-timed policy move," indicating "The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test." Therefore when they reduce their bond purchases, it does not mean they will immediately raise rates. The most important statement I read was, "Today, with substantial slack remaining in the labor market and the pandemic continuing, such a mistake could be particularly harmful." Translation, weekly, and monthly jobs data are going to dictate the timing of a rate hike.

As a Gold and Silver investor, you want to see a prolonged recovery in the labor market, leading to a lengthier trajectory of the recent price recovery. If you had not had an opportunity to add to your current position or feel underweighted in Gold, you would need the jobs number to BEAT expectations. That will trigger a minor sell-off in Gold as it trades within the probable range of 1819.8 - 1779.8. A disappointing job number further extends Gold to our next major three-star pocket resistance from 1835-1840/oz.

Daily Gold Chart

Our Gold strategy

We wrote in great lengths about a strategy and posted on Kitco on several occasions that filled, and now you are waiting for higher levels to target for a year-end run. Here is it again "If you have been working with us and are looking to position in Gold for the long run, we suggested that our clients consider using FOUR Micro 10 oz December Gold contracts per $25,000 and buying TWO at 1775 and TWO at 1685, with a stop at 1640. Doing such would ideally risk $3,600. We would look to a gold target of 2100/oz, which would allow for a profit of $14,800." If you would like to learn more about the strategies we are implementing or learn more about technical analysis, we created a guide to provide you with all the steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Precious Metals.

Good luck and good trading,

Phillip Streible

Chief Market Strategist


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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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