RJO FuturesCast

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Metals

Gold Futures Need a New Catalyst

Posted 08/30/2019 9:03AM CT | Joshua Graves

December gold futures have held up quite nicely given the recent surges in the stock market and the easing of trade tensions with China. Although the rhetoric could easily heat up once more between Trump and Xi, for now, it appears Trump wants to stop the stock market whip saw and get us marching back to the highs. There are a number of factors that are weighing on gold prices right now, and this is everything from the 4-week high’s seen in the U.S. dollar index to the still positive U.S. economic data that has been coming out for months. The trade tensions on pause and an already heavily long speculative managed money position is leaving us running out of steam now that we’ve had a $120 rally over the course of August. The record managed money long position has likely been broken, but we won’t know for sure until today’s COT report comes out. 288,000 contracts long is quite heavy indeed, and for another 100,000 contracts to be added we need more whipsaw in the stock market and more tension between the U.S. and China.

The December contract is testing the upward trend we’ve been in since August 1st. A break of this trend could threaten the August rally, and considering I’m not the only one watching the gold technicals there are a lot of traders long gold according to the COT report. When everyone is on one side of the trade a rush to the exit could trigger a washout below 1500. New catalysts to be bullish the precious metal need to be seen, and quickly. If you would like more information on how to play gold at these levels please contact me directly.

Gold Dec ’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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