RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

We’ve all seen how gold has been trading since the end of January; it’s on a tear and has no signs of stopping. The pop in gold on Thursday is significant in a few different ways. For one, it’s broke out to levels we have not seen since the days following the election. The second is that we’ve broken a psychological level of $1250. We are continuing to march right up the trend drawn from the 1180 low at the end of January. It’s clear that if you are betting against gold, you are searching for a reason to be short. Economic data over the past few weeks has been positive, but this week was more neutral, and a bit different given the shortened week. We had a positive existing home sales number well above expectations for January, showing a 3.3% increase for the month. All eyes, however, were on the FOMC minutes on Wednesday. In a hawkish tone, most members agreed a rate hike should happen “fairly soon.” This is obviously negative for gold which would fall following a US Dollar rally on a US rate hike. Right now traders are seeing a 36% chance of a rate hike coming on the March 14-15 meeting. US Treasury Secretary Steve Mnuchin’s comments on the Trump Administration Thursday seemed to help the gold market, which saw an impressive grain to over $1252 at one point. Traders saw his comments as “excessive” and triggered a selloff in the US Dollar, supporting gold.

I look at gold and see a continued rally to $1272, where the 200 day moving average sits. I would look at gold to come to this level and find a lot of resistance. A close above this level opens the all important $1300. How you play April Gold leading into the FOMC meeting will be quite challenging. Traders need to analyze the economic data closely over the next few weeks for any signs of weakness, and sign the Fed will hold off on a rate hike.


Gold Daily Chart

Joshua Graves

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.