If you take a look at the gold market over the past few weeks, the bleeding seems to have stopped for the near term. We formed a low of $1124.30 in Mid-December. Since this low, we’ve managed to claw back roughly $80 breaking through the psychological and important $1200.00 level. Looking at the past week from a fundamental perspective, there was little news of significant impact to influence the gold market. The biggest would be the first speech of President-Elect Trump on Wednesday. This speech was viewed as bearish for equities and bullish for gold. During this speech Trump failed to outline some of his policies, and went on the offensive speaking about media coverage rather than focus on his tasks during the first 100 days. The jobless claims number (which came in at 247,000, with a consensus of 255,000.) was viewed as a positive for the stock market. Both of these had clear effects on the gold market.
Now let’s look at this from a technical perspective. The market was obviously much oversold when it formed a short term bottom of $1124.30, and a correction was likely in some fashion. Gold has stabilized right around $1200, but has a longer term bottom been formed? Traders need to be aware of the golden cross and the death cross. They are two of the most important technical indications on any chart. The golden cross is formed when a market crosses above the 200-day moving average. A death cross is formed when a market crosses below the moving average, it’s as simple as that. The gold market formed the death cross on election night, and closed well below the 200 day right after the election. Although we have recently crossed the 50 day moving average at $1191, we are a far cry from the 200 day moving average at $1273.80. Gold should be considered a bear market until we cross that threshold. For more information on how to play the gold market please contact me directly at 312-373-5383.
Market Strategist II
Josh began his career in May of 2013 after graduating from Purdue University, West Lafayette. He received a degree in Agricultural Economics, with a Certificate in Entrepreneurship. He started at Paragon Investments in Kansas, the heart of wheat country. While working there he developed long term relationships with corn, soybean, and wheat producers, speaking with them on a weekly basis. His goal was to market their physical production more effectively through tracking basis, as well as hedge their exposure in the grain and cattle markets through a variety of futures and option strategies. He then moved to Florida to work for PFL Petroleum, a physical biofuels brokerage, and gained significant exposure to OTC and physical energy markets. Trading has been a passion from day one of his career. In his free time he stays active in downtown Chicago, attends sporting events, and holds an FAA Private Pilot’s License and flies Cirrus and Cessna aircraft regularly.