With the start of a new week, a new quarter, and a holiday week, it’s action-packed. The global economy is continuing to lose momentum as a weak China has resulted in weak demand for physical commodities. However, with the New quarter and being ever closer to the anticipated cutting cycle, we believe that the momentum shift will begin to improve, and commodities will see another broad-based rally. Expectations are for two more interest rate cuts from the ECB and two from the Fed, with one in September and December.
Looking at the Data
Monday
- 8:45 am Manufacturing PMI data
- 9:00 am ISM Manufacturing
- 3:00 pm ECB President Lagarde speaks
Tuesday
- 8:30 am Powell speaks
- 9:00 am Jolts Job Openings
Wednesday
- 7:15 am ADP
- 7:30 am Initial Claims
- 9:00 am ISM Services PMI
Friday
- 7:30 am Payroll Data exp 189,000 vs 272,000 last month
- 7:30 Unemployment Rate 6.3% expected vs 6.2% last month – Expect the market volume to taper after 10 am central time
Looking at the Metals, we have seen solid consolidation, just above $2300 in Gold and above $29 in September Silver. Copper futures are also attempting to turn higher as we expect the world-renfined copper to end the year with a deficit. We expect traders to continue to utilized defined risk strategies to pick a bottom through out right options and bull call spreads. September options give traders 57 days on most metals products.
Taking it to the Charts
Gold
Critical support $2300
The first resistance is Friday’s high of $2350, followed by the 50 DMA at $2363. A close over $2386 will nullify the bearish trend as we have retraced the June 21 sell-off. Once a breakback above $2400 occurs, the floodgates should open again as momentum traders begin to re-enter the markets.
Silver
Remains in a consolidation pattern with critical support at $28.77 and complacency at the 50 DMA at $29.63. Futures will need to break through $30, followed by $31.01, in order to capture another “this is its moment.”
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One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.
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