RJO FuturesCast

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Metals

Gold Futures are Basing a Bottom

Posted 05/10/2018 9:53AM CT | Frank J. Cholly

Gold futures continue to chop around in a sideways trading range of roughly $1,305 to $1,370. The June futures contract has, in my opinion, now based a bottom and is ready to move back towards the $1,350 range. Today June futures are currently trading at $1,320. The 200-day moving average is $1,315. A close at this level or higher would be considered supportive and encourage the bulls to add to the long positions. I like gold at these levels for longer term positions. The only reason that the corrective selloff has reached this level is due to the strength in the US dollar. I believe that is happening because China is buying dollars to devalue the Yuan! Gold does well in a “safe-haven” trade or a weak dollar trade, however, energy prices are very strong and that becomes inflationary. Gold performs best in an “inflationary trade.” I see inflation really heating up and energies are just the leader in the beginning of another commodity bull market. Gold will follow…

Gold needs to have a close above the 200-DMA at $1,315 and then again above $1,325. If this bounce gets rejected, then we will likely see a “hard” test of $1,300.

Gold Jun ’18 Daily Chart

Gold Jun '18 Daily Chart

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Frank J. Cholly

Senior Market Strategist
Frank brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.
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