RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

December gold has been under quite a bit of pressure the past few days. Even as I write this, gold is down another $20 sitting right at the lows around $1493. The stock market seemed to shrug off the Trump impeachment inquiry, and combined with some recent healthy economic data, has back tracked a bit. This morning’s durable goods orders that came in above expectations and stocks have been holding which is adding to the pressure. In my opinion, this is an area where traders should look where gold was at the beginning of September, and look at the value at those levels. There are a few reasons why we should hold around $1490. The first and most obvious is the big picture theme of uncertainty over the upcoming trade talks, where a breakthrough is highly unlikely. At best I think we will see, an “agree to disagree, let’s keep talking” outcome. This is likely, given the very thorny issues that have not been addressed such as property theft and forced technology transfers. The second main reason to look at buying gold at these levels is the central bank buying around the world continues to be seen, and that theme isn’t going anywhere given the uncertainty in Europe as interest rates continue to dive.

The one thing to consider should gold move below $1490 is how far it could go before heavy buyers come back to shore it up. Managed money in the gold market is what speculators should watch, and traders should consider the all-time record long position of 290,000+ contracts long gold. The door has not got any bigger for those who run for the exits should gold break this key support area of $1490. Traders should start positioning long using a combination of options and futures. If you would like more information on how to trade gold on this pullback, contact me directly.

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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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