Rule: Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, wealthy investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets. Gold prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool $3,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.

This is a very simple gold trading strategy that depends on pyramiding your position with a series of four trades and removing all the profit from your account at the end of these four trades. With practice, you will find this gold trading strategy very simple and easy to implement.

  • Gold reacts to uncertainty in the markets
  • A drop in major currencies can indicate a run into gold.
  • Remember investors tend to take profit from gold so watch for trading opportunities when investors are taking profits, not moving out of the markets.

Analysis and Recommendations:

Gold dropped Friday as the U.S. dollar pushed higher and investors sold the metals alongside other assets considered riskier such as stocks and oil. Gold ended $12.40, or 0.7%, lower at $1,709.80 an ounce and is expected to hold here this week until some data is released on Thursday and Friday. Without any additional geopolitical problems or surprises in Europe it should be a quiet week, as investors move into riskier assets.

Gold had gained 0.6% on Thursday. On the week, gold was down 3.7%, off nearly $70 per ounce.

We have weakness in risky assets across the board.

We also continue to see the unwinding of the [third round of quantitative easing trade, a lot of people had positioned for it ahead of congressional testimony by Federal Reserve Chairman Ben Bernanke.

Gold declined 4.3% on Wednesday after Bernanke quashed hopes for more U.S. economic stimulus, weakening, at least for now, one of the pillars of gold's long-term rally.

Only Good News from the US:

Existing home sales US existing home sales picked up unexpectedly in January, but the previous figures were downwardly revised. 

Initial jobless claims US initial jobless claims stayed unchanged in the week ending February the 18th, while the consensus was looking for an increase.

University of Michigan consumer confidence The final figure of Michigan consumer confidence for February showed a strong upward, revision from 72.5 to 75.3, while only a minor one was expected.

New home sales After increasing for four consecutive months, US new home sales dropped at the start of 2012. 

Federal Reserve Chairman Bernanke testified before the Senate, this week, the markets found his comments a bit dovish and drew conclusions that any additional QA was off the table for the time being. Although the Chairman warned that the economy was recovering, he stated it was fragile and he was still worried about jobs. Gold soared on his comments.

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Historical

High:     1916.20

Low:      1321.10

Economic Events: (GMT)

Only Major Events:

Please refer to the daily forecasts for all economic data releases for each day, with details and forecast.

Mar. 07

13:15

 

USD

 
 
 

ADP Nonfarm Employment Change 

 

 
 
 
 
 
 

Mar. 08

12:00

 

GBP

 
 
 

Interest Rate Decision 

 

 
 
 
 
 
 

 

12:45

 

EUR

 
 
 

Interest Rate Decision 

 

 
 
 
 
 
 

 

13:30

 

USD

 
 
 

Initial Jobless Claims 

 

 
 
 
 
 
 

 

13:30

 

EUR

 
 
 

ECB President Draghi Speaks 

 

 
 
 
 
 
 

Mar. 09

02:00

 

CNY

 
 
 

Chinese CPI (YoY) 

 

 
 
 
 
 
 

 

13:30

 

USD

 
 
 

Nonfarm Payrolls 

 

 
 
 
 
 
 

 

13:30

 

USD

 
 
 

Trade Balance 

 

 
 
 
 
 
 

 

13:30

 

USD

 
 
 

Unemployment Rate 

 

 
 
 
 
 
 

Gold Pivot Points (Time Frame: 1 Day)

 

Name S3 S2 S1 Pivot R1 R2 R3

Classic
1685.23
1694.92
1703.43
1713.12
1721.63
1731.32
1739.83

Fibonacci
1694.92
1701.87
1706.16
1713.12
1720.07
1724.36
1731.32

Camarilla
1706.94
1708.61
1710.28
1713.12
1713.62
1715.29
1716.96

Woodie's
-
1694.63
1702.85
1712.83
1721.05
1731.03
-

DeMark's
-
-
1717.38
1710.99
1699.18
-
-