RJO FuturesCast

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Metals

August Gold, Time to Plummet?

Posted 06/15/2018 9:08AM CT | Joshua Graves

Much news regarding gold has been seen this week from the FOMC meeting where rates were raised a quarter point, to tariffs on Chinese goods. Gold has had several reasons to selloff and now it appears that it’s finally enough to break all support around 1290 and continue down. A fed meeting where rates are raised typically helps the US dollar and pressures gold; this didn’t happen Wednesday, and gold traded up and appeared to start to break out. Then, the US dollar traded to it’s highest level in over a year, while a miss on industrial production this morning both put pressure on the precious metal. On the bullish side one would think that $50B worth of Chinese tariffs with most assured retaliation from China would rattle the markets and show investors flocking to safe havens.

On the technical side the bull picture is no longer there. All signs point to lower prices, and with this severe break in gold this morning it appears that we are indeed headed to December of 2017 lows of around 1260. We have broken the most recent set of lows around 1286 and have not been at this level since December 21st of 2017. Gold entered into bear territory several weeks ago when the 200-day moving average was crossed indicating a “death cross” or overall market direction up or down. A close above 1313 would show that this market does have the stamina to make a run to new highs, and a close above 1319 would show a “gold cross” or bullish cross above the 200-day moving average.

Gold Aug ’18 Daily Chart

Gold Aug '18 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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