RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Coronavirus has been front and center among every news and media outlet in the world since its inception. It’s no surprise that traders are looking to safe havens such as gold as a way to diversify away from the stock market. Gold traders are probably torn between the fantastic economic data that has been pouring out of the U.S. recently and the coronavirus slowing everything down (at least in the future.) U.S. equities data has had blowout jobs numbers, low unemployment and great company earnings over the past few weeks. It seems like everything is fine if coronavirus didn’t exist. Traders might be bracing for weaker economic data to come in the following months, as the coronavirus will have a lagging effect on the economy with ripple effects yet to be felt. The big picture, longer term central bank buying of the precious metal is the behind the scenes buying support to keep gold above 1500, but to push through 1600 I think more bearish economic data coupled with an acceleration in coronavirus outbreaks is needed.

Technically, gold traders must be happy about the key pivot point of 1550 on the April contract holding. I think that really, the next major technical hurdle that gold will need to break is 1600. Once that’s taken out all bets are off as to where it could go. Traders should be carefully watching the volume as well. Rising volume on rising markets is great, but the latter of falling volume is not a good sign. We need confidence in the trade with volume pressing higher along with price action. Besides this technical red flag, gold as a whole in my opinion is completely tied to the US equity market right now. If we do in fact see a major selloff more than just one or two sessions, this could be enough to push gold beyond 1600 when coupled with coronavirus. Options are a great way to step in lightly, with limited risk. If you would like more information on how to play gold please contact me directly.

Gold Apr ’20 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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