RJO FuturesCast

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Metals

Feb Gold, A Changing Landscape Could Pressure

Posted 01/18/2019 8:52AM CT | Joshua Graves

February gold futures have been on the verge of a breakout in either direction for the past few weeks. The chart has been consolidating for some time and it looks like in the near-term gold is headed slightly lower. Overbought and oversold are terms that are used widely in the trading world and they mean nothing. Markets can remain in these “overbought” and “oversold” areas for months, even years. How can you predict the next move based on those terms alone? gold wasn’t “overbought” as it approached 1300, the landscape simply changed from a fundamental perspective. The recent optimism in the market came with reports of an easing of Chinese tariffs more likely now than in the last 6 months, and general stock market stability have put gold on the defensive. The U.S. economic data continues to show a robust economy, and no real changes that show a cooling.

The partial government shutdown isn’t affecting anything other than politics and airport security lines, but the perception is that it will impact the economy. This should be bullish enough to keep gold in the upper 1200’s for the foreseeable future. A key event that could put gold into wild swings both up and down is the trade delegation from China meeting U.S. trade officials in Washington on Jan 30-31. If framework is reached for a deal you could see gold push to new lows, and US equities to new highs. On the bearish side, if the opposite happens for the meeting and equities push lower it’s likely we see a swift move above 1300 and likely 1325 as the markets runs stops hovering above 1300.

Gold Feb ’19 Daily Chart

Gold Feb '19 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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