RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

August gold futures have seen once again, a fair bit of volatility and remains in a sideways pattern despite the washout from last Friday. In recent articles I’ve states my thoughts on this market, and I continue to say forget about the noise that comes out every day about what’s bullish and what’s bearish and look at the technical at this point. The most important level to watch in gold right now from a technical perspective is the recent all time high, which on August futures is 1789 back on April 14th. The gold market seems to be a buy on a dip to 1680 to 1685 and a sell around 1750 to 1760. I think that the same themes for talking about why be bullish and why be bearish in gold have been talked about endlessly. The only interesting bullish theme has been central bank buying as support, and seemingly endless weekly inflow of physical gold into the etf holdings that do provide bullish support with increased physical demand.

There are ways to trade gold right now and everything wants to know the best risk/reward setup. Unfortunately, there isn’t a “risk free” perfect trade out there. With a market like gold you need to accept the fact that the average trading range on gold futures right now is $33. On a 100oz contract, that is $3300, while a mini 50oz contract is half of this. Options are a great way to hedge a futures position with unlimited profit potential and limited risk. The other trade I would recommend involves options and plays gold to a neutral market outlook, that has limited risk and limited reward, and in a fairly short time frame under 30 days.

Gold Aug ’20 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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