RJO FuturesCast

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Metals

April Gold, Retest of $1300 Coming?

Posted 02/09/2018 10:22AM CT | Joshua Graves

April Gold has seen quite the trading range over the past few months. Mid December lows of around 1250 to just over 1360 at the end of January. The question is where do we go from here? Currently, April gold is trading around 1315, and has seen continued pressure despite an extremely volatile stock market which typically puts a bid into safe havens such as gold. At this point if you look at the technicals alone, you will see that the pivot point for gold lies around 1300-1305. This represents a 50% retracement from low to high. I would expect gold to test this level, and if it does not hold the 200-day moving average sits around 1292. A break through that level puts the mid December lows in the gun sights. Also, if you look at the ADX which measures the strength of the trend, with 50 or greater indicating a strong trend and 20 indicating a weak trend, the ADX currently sits at 36 which isn’t particularly strong (something the bears should consider). One way to trade gold would be to play this range between 1240 and 1360 which is simple to structure in terms of options trading.

The fundamentals of gold suggest lower prices as well. If you look at the favorable US data, the overall euphoria in the stock market, and the extremely high treasury yields (yields go up, bond prices go down) the fundamentals support much lower prices. 

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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