Analytical Charts - Jim Wyckoff
Gold futures score the second largest monthly gain this year
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Gold futures basis the most active December contract gained the second largest percentage and dollar gain in a single month this year. The largest single monthly gain in gold futures this year occurred in March. In March of this year, the most active gold contract (this data is from a continuous futures contract) gained $131.90, or 6.9% with a volume of 5.539M. During March gold opened at $1909.90 and closed at $2044.50.
Gains for this month were similar but slightly less in both the dollar amount and percentage gains. The December contract opened at $1864.40 and as of 4:00 PM EDT is currently fixed at $1933.60, a net gain of $127.50, or 6.82% with a monthly volume of 4.6 34M. This month gold traded to a high of $2019.70 with its lowest value at $1823.50.
Today the December contract is currently down $12.00 or 0.60% and fixed at $1993.50 with a daily volume of 203,989K. Trading is moved from New York to Globex and will begin trading through Globex in just under two hours to correspond with Wednesday’s November 1, opening bid Australia.
Overwhelmingly, the vast majority of gains witnessed this month began after a surprise terrorist attack by the militant group Hamas on Israel on October 9. Gold had dropped to its lowest value of $1823.50 on October 9. Gold has been continuing to rise is the attack resulted in a major conflict and war between Israel and Hamas that continues to this day.
The initial concern was that the war between Israel and Hamas would escalate to a much wider conflict with other areas in the Middle East becoming active. That is precisely what has occurred with the war now on multiple borders surrounding Israel involving multiple groups waging war against Israel and the IDF ground attack on Gaza.
Today’s decline in gold futures have approximately $12 is the direct result of an exceedingly strong dollar. The dollar is currently up 0.53% and the index is fixed at 106.495. Dollar strength today is the result of the upcoming FOMC meeting by the Federal Reserve which concludes on Wednesday, November 1.
Overall, while the dollar garnered very little change in value over the month, the US currency remains near recent highs and continues to be supported as a direct result of expectations by the Federal Reserve to continue their monetary policy of “higher for longer”.
This phrase first appeared around September after the release of the Fed’s Economic Projections or dot plot which revealed a much more aggressive monetary policy by the Federal Reserve which was revised more hawkish from the June projections. According to futures traders through the eyes of the CME’s FedWatch tool, there is a 97.1% probability that the Federal Reserve will not raise rates and leave them at their current level which is between 5 ¼% and 5 ½%.
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Wishing you as always good trading,