Market Commentary June 8, 2019

The Trading Daily Market Commentary features a summary of selected market segments as well as economic matters. Its content of interest is made available to all traders and investors at large

Since May 30, the market of Gold metal and Gold stocks have been on the run. It's reasonable to state that most market participators were stunned by this increase  - not readers. Although Gold sentiment wasn't very bearish, therefore, very few commentators foresaw a bounce.

Gold Market Setup

While Gold market remains a much away from its 2011 top in US Dollar denomination, it seems to be very strong in almost every non-US Dollar currency including other advanced currencies such as Euro Dollar and the Japanese Yen. Therefore stating differently, the Gold price action is showing robustness despite a mighty US Dollar showing.

As our experience has taught us, this happening is correlated with the early steps of brand-new bull markets. This is because Gold leads to discount future interest rate reductions by the Federal Reserve long before they are executed: while the US Dollar's answer is traditionally much slower.

A similar Gold market setup was, for example, seen in 2000/2001. In the latter part of 2000 Gold started to rise somewhat notwithstanding a still ascending US Dollar, while Gold equities continued to be relatively weak and initially proceeded to decline. This comparable underperformance of Gold equities also typically transpires before of short to long term trend shifts.

Though once Gold equities do begin to move upward, they typically perform much better than the yellow metal (we have discussed this in the previous articles) 

A pullback condition is most probable. However, the most recent powerful movement in the Gold sector is the very significant a heads-up signal and further hints that it will be worth paying very close attention from hereabouts on out.

Seasonally Gold performs weakly within the summer months; the yearly seasonal low is typically done in mid-June, followed by a subsequent low in the month of August. But, it's unmistakably possible that the low annual prices have arrived much earlier this year.

Although Gold market commonly struggles throughout the summer months, there exist various historical cases of summer metal rallies as well, which resulted in the connection of long-term bull markets - especially vigorous summer rallies were marked in 1977/1978.

Lastly, there is unmistakably active Key Res $1,341 and completed Outer Gold Rally $1,345 area, which Gold has been incapable of breaking in the June 5 attempt as well as yesterday (June 7). It seems to us that the likelihood of finally breaking through this well-established resistance level is much better this time than beforehand.

For one thing, the major rally has begun on May 21 by retesting of the Key Res $1,270; the primary backdrop is more Gold-friendly market at the present moment than it was on occasion of the recent breakout attempt. 

If it does ultimately happen, it's probably not going to pass right away; however, an inevitable breakout over this critical resistance level mentioned above would unquestionably be quite significant from a technical perspective - Keep your eyes peeled.

As The Markets Turn

 Extending the strong market recovery observed over the past several sessions, Wall Street surged higher throughout the trading session on Friday. With the extended rally, the DJI attained its healthiest closing level in a month following May 31 ending at a four-month low.

For the entire week, the DJI shoot up by 4.7% to show its best trading week since November of the last year, while the Nasdaq and the broad S&P 500 indices jumped by 3.9% and 4.4%, respectively.

Aside from Wall Street, in overseas Friday trading, stock markets across Europe and Asian-Pacific region had a green trading session yesterday, with several vital markets closed for holidays. 

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