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Trading , Metals

Gold Prices Had 2.5 Million Reasons to Fall. But Instead, they Rallied All Week Long. Any Questions?

by Nico Isaac
Updated: June 16, 2020

I'm Nico Isaac and THIS is Chart of the Day

Gold Prices Had 2.5 Million Reasons to Fall. But Instead, they Rallied All Week Long. Any Questions?

This chart of gold prices shows why one June 12 Kitco called the period between June 7 and June 12 a quote "good week for gold bulls." with the yellow metal gaining $43 per ounce over that time.

200616 - NI

For traders, however, a week is only as good as one's ability to anticipate the trend beforehand. Which raises the question, what reason did gold bulls have to be



In fact, on June 5, gold bulls had exactly 2.5 million reasons to believe the week ahead was going to be anything but good. That day, the US Labor Department dropped a positive-bomb, by reporting a 2.5 million RISE in non-farm payrolls

-- VERSUS -- the market's wildly opposing expectation for an 8 million -- DECLINE in payrolls.

This prompted a parade of positive headlines that raised a glass to quote "Signs of a Recovery" AND a renewed "Risk on sentiment"

ALL of which pushed gold prices to a two-month low for its biggest weekly drop since March

Said one June 5 Kitco: "Gold bulls are fading fast... after shocking rise in US Jobs."

Added another same-day MarketWatch:

QUOTE "The U.S. unemployment rate has shocked everyone because the number was much lower than the market expectation... This a mind-blowing number and shows that the economy is improving." END QUOTE

It also seemed the perfect set up for further declines in gold. Yet, as trading resumed on Monday June 7, the metal began a week-long uptrend.

Never at a loss for explanations AFTER the fact, mainstream experts cited two June 11 news items for gold's sudden strength: the "sobering economic" outlook from the Fed, and forecasts of another wave of coronavirus cases in the US.

But back on June 5 -- as prices stood at a 2-month low and conventional wisdom was all about a flight out of safe havens -- our Metals Pro Service showed a version of this gold chart, which showed an (a) (b) (c) correction as complete. In turn, this quote "opened the door to considering an immediately bullish count." To make the point, the chart included this directional arrow.

200616 - NI2

Here's what gold's price did in the days after.

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