Gold Absorbing Nothing Other Than Sleep

Market Analyst & Author
August 28, 2022

Asleep indeed is our once mighty Gold. Fortunately, when there's not a lot to  say, we can always look at pretty pictures, for each is worth a thousand words,  (if not in due course thousands to one's wealth). To wit:  

Below in the lower left panel is Gold's EDTR ("Expected Daily Trading Range")  from one year ago-to-date. That's right, Mel, it has slumbered back down into  August's Dog-Day Doldrums of only 20 points, even as the world's economic  wheels come off. Completely aloof to it all is Gold. Or as we've herein stated in  recent weeks, "Nobody cares." Say no more: 

Above in the upper right panel we've the last three months-to-date of Gold's  daily closing price astride its "Market Magnet" which is the thicker line currently  labeled 1770. The oscillator (price less magnet) at the foot of the panel clearly  depicts Gold as being unable to get out of its own way and escape the attraction  of the magnet, (which indeed is the latter's intended role as you website  followers know). Regardless, by either the EDTR or Magnet, Gold's movement  these days is sufficiently squished.  

Gold settled its trading week yesterday (Friday) at 1751, from high-to-low by  percentage its seventh-narrowest such stint year-to-date. Not even Federal  Reserve Chairman Powell -- in Wyoming cowboy style having just shot the stock  market in the foot for the balance of this year -- could nary stir Gold a wit.  ("Snore.........") 

Specific to the S&P 500, yesterday post-Powell produced the year's second worst single-day high-to-low percentage drop (-3.5%). In turn, the S&P broke  below the recently-built structural support of the 4100s. And on the heels of a  comparatively weak Q2 Earnings Season combined with increasing interest  rates, the S&P's ducks are aligning to (finally) give a true test to the more  dominant underlying support structure spanning from 3600-3200; it almost so  did back in June, and today's fundamental mess makes it all the more right for  said test. (Note to the informed: September commences on Thursday). 

And yet given all that, Gold is barely budging as exemplified here by the  rightmost weekly bars, even as the blue dots depict the present parabolic trend  as Long despite price drifting further below its 1779-1854 resistance zone:  

Query: what ever happened to the Inflation Reduction Act? For it must be said  that the Fed remains in its stead for higher rates ahead, even as its favoured  inflation gauge -- Core Personal Consumption Expenditures -- was practically  "inflation-less" for July.  

Still, Q2's Gross Domestic Product (per its second of three readings) was just  revised from shrinkage initially of -0.9% to only -0.6%. 'Twas just the fifth time  this century (86 quarters) that a GDP shrinkage reading has been revised to less  shrinkage by +0.3% or more. ('Course, the dirty little secret is that the Chain  Deflator component itself was revised higher by +0.2%, meaning that REAL GDP  shrinkage was only lessened by +0.1% ... but again, we're not supposed to  point that out). As for those of you scoring at home, come 29 September we'll  see the finalized Q2 GDP. 

Moreover with respect to Q2's GDP shrinkage, the ever-venerable Reuters  ("Since 1851!") indubitably stated that "Underlying Data Show No Recession"Fantastic, that! Let's go to the Economic Barometer:  

No recession aside, notable metrics for the Baro this past week showed weaker  month-over-month July readings for Durable Orders, for both Personal Income  and Spending, and for New Home Sales.  

Then came this from a survey by PricewaterhouseCoopers (yes 'tis all one word)  that some 50% of Stateside companies are poised to cut jobs. Uh-oh. Further,  as stated by Foxy: "The survey comes amid growing concerns that the Federal  Reserve's war on inflation could trigger a recession." (You cannot make this stuff  up; where has Foxy been these past eight months?).But then as noted, rival  Reuters has thankfully said there's no recession. The FinMedia go by their fellow  parrots; we go by the numbers.  

And no recession dovetails well with Atlanta FedPrez Raphael "The Boss" Bostic's  notion (on Thursday) that thoughts ought be tempered about a reduction in the  FedFunds rate, albeit he is sensitive to foreign economic aspects' effects on  StateSide affairs and Fed policy. That according to the Wall Street Journal, which  just two days prior (on Tuesday) ran with: "Global Economies Flash Warning of  Sharp Slowdown Business activity in the U.S., Europe and Japan". So we're  lucky there's no recession. (Pssst: Got Gold?)  

Here we've another two-panel portrayal of Gold, its daily bars from three  months ago-to-date on the left and 10-day Market Profile on the right. The baby  blue dots of trend consistency have been magnificent leaders of price 

throughout, whereas the Profile's overhead resistors shall require some real  buying power near-term ("Snore.........") to overcome:  

For Silver, the nearly identical patterns to Gold continue, her "Baby Blues" (at  left) as guiding lights to price direction, which in turn finds price in the Profile's  (at right) basement: 

Did we mention than September starts next week?  

"You know you did, mmb..." 

Alright, Squire, we're just trying to build a little drama into these Dog Days. The  point is: September for the S&P 500 is on balance a losing month. Spanning the  52 years from 1970 though 2021 inclusive, no matter how you slice it and dice  it, September comes up negative. The average change across those five decades  for September is -0.8%; or in "trimming the mean", 'tis still -0.5%; or even if in  denial by pointing to the median, you get -0.2%. Cue Jefferson Starship from  '84: "No way out..." Oh there was the +9% outlier in 2010 as the economy  roared back from the FinCrisis. But there've been five Septembers with net  losses ranging from -8% to -12%; and given the aforementioned earnings  weakness within a rising interest rate environment, the best protective place  may well be in the depths of your (albeit sleepy) Gold bunker!




Mark Mead Baillie

Mark Mead Baillie has had an extensive business career beginning in banking and financial services for two years with Banque Nationale de Paris to corporate research for three years at Barclays Bank and then for six years as an analyst and corporate lender with Société Générale.
For the last 22 years he has expanded his financial expertise by creating his own financial services company, de Meadville International, which comprehensively follows his BEGOS complex of markets (Bond/Euro/Gold/Oil/S&P) and the trading of the futures therein. He is recognized within the financial community of demonstrating creative technical skills that surpass industry standards toward making highly informed market assessments and his work is featured in Merrill Lynch Wealth Management client presentations.  He has adapted such skills into becoming the popular author each week of the prolific “The Gold Update” and is known in the financial website community as “mmb” and “deMeadville”.
Mr. Baillie holds a BS in Business from the University of Southern California and an MBA in Finance from Golden Gate University.

Gold is impervious to rust.
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