RJO FuturesCast

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Metals

February Gold, Is a Rally Possible?

Posted 11/30/2018 9:11AM CT | Joshua Graves

Feb gold futures have once again, had a big reason to rally and did not seem to follow through going into today. If you look at the Feb contract this morning, we are trading down almost $9 following a quite bullish speech from Fed chair Jerome Powell. In his speech this week, he had indicated that the Fed in short might be a little slower and cautious with their rate hikes as we go into 2019. The market has all but priced in another rate hike before the new year in December. In theory, this should have bearish effects on gold, and bullish effects on the U.S. dollar index as investors seek a stronger interest-bearing asset. I believe that gold has plenty of room to run from here as the fed could seek a slower path to rate hikes in 2019.

It’s worth noting that Feb gold has been a very choppy, sideways trend for the past several months and there is a pretty big element missing to the gold trade, geopolitical tension. North Korean missiles have been stopped, tensions in the South China sea have been subdued, and there have not been many other areas of turmoil in the world recently. If there isn’t a deal at the G20 meeting this weekend, I would imagine that China will no longer help with the North Korean threat and that’s certainly something to at the very least consider when looking at gold to the upside. I believe that with the chance of rate hike slowdowns, North Korean tensions increasing once more, and a recently shaky stock market there are more reasons than in recent months to position long in the gold market. 

Gold Feb ’19 Daily Chart

Gold Feb '19 Daily Chart

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Joshua Graves

Senior Market Strategist
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.
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