RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Gold traders are struggling to find direction. It seems likely to see tapering sooner rather than later, so last weeks rally has quickly lost steam. Sideways is a trend and easily traded while it lasts, but a market cannot trade sideways forever either. Gold has recently gone through a very sharp selloff and an equally sharp recovery bounce. But golds inability to breakout above $1,830 warns for trade to revisit August swing low of $1,677 range. If gold closes below $1,780 then $1,750 to $1,720 is in the cards. Of course, anything out of the Fed indicating a “delay” in tapering would be supportive to gold prices moving back towards $1,830 range. However, the strength in the dollar and the believe that the Fed will do the right thing has pressured gold below $1,800. Other precious metals like silver and platinum have also struggled to hold rallies and find direction.

It’s my opinion that the Fed has created a dependency on easy monetary policy. We cannot depend on the Fed to always be there! It used to be easy to be bullish gold. You could always make an excuse…safe haven trade, trade it as a currency, or inflation hedge. The Fed needs to get out of the way and let traders detox cold turkey. Just my opinion. It won’t be easy, and it won’t be pretty, but it is necessary.

Gold Dec ’21 Daily Chart
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Frank J. Cholly

Senior Market Strategist
Frank is a swap registered trader who 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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