RJO FuturesCast

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Metals

April Gold, Are We Headed Back to 1300?

Posted 02/23/2018 9:25AM CT | Joshua Graves

April gold futures have seen essentially range bound trading for the past few months. It seems like 1365 is a top while 1300 is a low. If you look at the fundamentals of gold you really could make a case either way. Usually in a commodity market with a clear trend, there are one or two major driving factors that lead the market higher. In the case of gold, it’s been range bound. The bulls are focusing on the weaker US dollar, and the recent drive higher in the stock market following the massive selloff we saw earlier in the month. There could also be a long term bullish setup for gold by looking at the South African mining as a whole. Production has been dropping due to significant graft in the national government, poor safety conditions, and many mining contracts expiring in mid-2018. Production is likely to continue the slump.

Another reason to be bullish the precious metal is that if the fed decided to take a more dovish stance than the recent hawkish tone we saw in the FOMC meeting. I would expect three rate hikes this year, but anything less could send gold much higher. Investors might show more interest in the metal if the stock market gets a little overheated once more. CPI data is the biggest gauge of inflation and if the data continues to come in above expectations we could see a much more hawkish Fed, thus sending gold lower. Technically gold should see much support 1290, while much resistance at 1365.

Gold Apr ’18 Daily Chart

gold_apr18_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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