RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Don’t Bail on Gold Just Yet

Posted 09/13/2019 9:27AM CT | Joshua Graves

December gold has seen volatility kick up quite a bit over the past few weeks. After the enormous rally through 1550, gold appears to have lost a bit of steam with a move back down to 1500 in recent sessions. Even though the stock market appears to be chugging along just fine toward the record high once again, shrugging off market concerns of a recession. The past 24 hours for gold has been quite exciting with the quick $30 pop up to 1532, only to quickly retreat back to 1507 on the close. This was due to the ECB cutting rates once again to negative territory at -.5%, along with $20B in monthly bond purchases as the Eurozone restarts their QE program. Europe is growing at 1% right now which is less than half the pace of the U.S. economy, a bullish development for gold. The trade war with China and the U.S. isn’t going anywhere, despite hope for an “interim” deal or talks in early October. There are too many thorny issues that will prevent a deal in the short term, and China will continue to try and delay any meaningful talks as tariffs are likely to be increased.

The one and only thing that I believe would be holding gold back and potentially trigger a washout below 1490 is the managed money position in the market being at an all-time record long 289,000 contracts. This is quite sizeable, and a lot of the buying power might be factored into the market already. If we hold 1500 and continue to make healthy moves higher in gold we should be okay and move toward 1600, and if managed money puts the foot on the brake we could be in for some real pain down to 1460 as the next stop.

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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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