December Gold, Is The Move Justified?

October 13, 2017 8:40AM CDT

December gold has seen quite the rally over the past few weeks. After a major selloff from contract highs, to coming right back down to the 200-day moving average of 1263, gold has been able to once again rally above 1300. It appears we are now going to be stuck in a trading range between 1250 and 1350 for the foreseeable future. Chinese imports of precious metals has been up for the past several weeks, and there have been some instances of talk of conflict out of North Korea. This is nothing out of the ordinary, however. We have seen imports of North Korean goods to China down 38% over the last month. Could this be attributed why North Korea has been quiet regarding missile and nuclear tests? North Korea had a founding holiday, the equivalent of our Independence Day holiday, on October 9. While everyone was expecting some sort of military or nuclear show of force, we saw nothing.

I think for gold to have real teeth above the 1325 level, we will need to see a ratcheting up of aggressive rhetoric from North Korea. A bigger reason behind the rally could be from President Trump announcing he will decertify the Iran Nuclear Deal. It’s expected to now be left up to congress if they want to stay in the deal. A look at the technical signals bullish price action with a close above 1300 today. A positive MACD cross as well as having the 200-day moving average lending support shows the strong technical. One thing to keep in mind is the ADX which measures strength of a trend, is quite low sitting at just 18 (a strong trending market sits at 40+). 

 

Dec '17 Gold Daily Chart

Dec '17 Gold Daily Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.