RJO FuturesCast

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Metals

December Gold: Very Two Sided, Now Where Does It Trade?

Posted 11/03/2017 8:26AM CT | Joshua Graves

December gold futures should continue to maintain weaker levels coming into November and December, averaging 1275 for the last quarter. There are many estimates for the number of rate hikes that we will see in 2018, and their effects on the price of gold depends on who you ask. Right now, there are estimates as high as six rate hikes in 2018 to as little as one rate hike. The most likely scenario is around 3-4 rate hikes in 2018 on top of the expected rate hike in December of 2017. Interest rate hikes are usually quite bullish for the US Dollar Index and bearish for any safe haven asset such as gold. Three rate hikes in 2018 would be sufficient to keep gold in check in my opinion, barring any more North Korean action. Another factor that will continue to pressure gold is the weakening of imports into China and India as two of the world’s biggest consumers of the precious metal. We need stronger imports, mainly  from leading consumer India, to help support fundamentals. Many investors don’t pay much attention the all-important gold/silver ratio currently just shy of 75.00 (shown in the chart below, a recent dip). We’ve seen a dip in this ratio indicating that investors are finding more appeal in the rarer metals like silver, platinum, and palladium. A technical perspective reveals that any break below the recent lows of 1263.80 would most likely see a continued washout down to 1250.

 

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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