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December Gold, Has a Short Term Top Been Formed?

Posted 10/20/2017 8:21AM CT | Joshua Graves

Recently, December gold has seen fairly choppy, two sided trade as the market struggles to find a direction. A recent low was clearly formed on October 6 at around 1263. The question as we see a failure yesterday of gold to hit 1300, is are we now headed lower as a result? Both bulls and bears have good points to make a case either way. The first reason and most obvious bullish factor is the North Korean issue. We’ve seen a quiet period from the hermit kingdom with no nuclear or missile tests. It’s something that will forever be an issue affecting gold. Another reason to be bullish would be key US and Chinese economic data that could come in weaker than expected, potentially leading future outlooks of rate hikes coming down and even a December rate hike potentially being questioned.

Reasons to be bearish are at the moment outweighing reasons to be bullish in my opinion. Right now, the tax reform situation in the US is looking more and more of a possibility with passage in the Senate of a budget plan. At the very least it increased market sentiment that something can actually pass in congress. The real question is if tax reform is passed and repatriated money is brought back into the US, how much of an effect it will have on the US economy. Some are calling for huge gains if it happens, others say much is already priced in and will have a negligible effect. Either way this is a long way away, and in the short term gold most likely breaks lower on a lack of geopolitical concerns, and continued resilience in the US dollar. 

 

Dec ’17 Gold Daily Chart

Dec '17 Gold 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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