February gold recently broke out to levels we have not seen since mid-July. The biggest news this week came on the heels of the FOMC meeting and the decision to hike interest rates once again by a quarter basis point. This is typically a very bullish event for the U.S. dollar, and bearish for gold. However, in this situation, it was widely expected that a hike was likely, and a more dovish tone was going to be taken by Fed chair Jerome Powell. He did the complete opposite, pressuring gold initially.

Thursday’s move in gold has me confident that we are going to make a run back toward the psychological level of 1300 over the coming months. You have several fundamental aspects that line up right now such as fear (and a lot of it) of economic slowdown and stock market volatility that has investors fleeing riskier assets and pushing money into safe havens. Another reason is the likelihood of a prolonged government shutdown. The border wall is likely to be a sticking point for President Trump, and this will push more fear into the market. The single biggest factor that I see pushing the gold market higher over the coming months besides the obvious stock market selloff, is the break in the U.S. dollar index. It’s pushed down to 1-month lows and broke the nice channel it had been in for months. This more than anything will continue to support gold at the 1250 level, and give it gas to run toward 1300 and beyond.

Gold Feb ’19 Daily Chart

Gold Feb '19 Daily Chart

Joshua Graves

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.