RJO FuturesCast

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Metals

Gold to Keep Shining Into 2019

Posted 02/01/2019 8:32AM CT | Joshua Graves

April gold futures have been surging amid several factors, with the primary reason being a very dovish fed from the last FOMC meeting. April gold has finally broke through the psychological and technically important 1300 level, to what I would now perceive as a brand new trading range. April gold should now trade between 1260 and 1400 for the foreseeable future. The lows in this contract were around 1200 back in August and October of 2018, now the most recent mid-December low of 1260 becomes a legitimate area of support. 1400 is a level that is still far away from current prices of 1325, which would be a level we have not seen since January and April of 2018. The bulls are firmly in control right now, as the supporting factors clearly support gold and make a case for a sell-off in the U.S. dollar which typically trades opposite of gold.

We have a very dovish fed, a government shutdown that’s likely to happen once more in 2 weeks, and a trade deal with China that even as progress was made this week still seems miles away. There are too many big issues to resolve before the March 1 deadline when 200B worth of tariffs go to 25% from 10. The economy in China is slowing down, and some US companies industrial companies such as CAT are whiffing on earnings leading investors to believe there could be a slump around the corner. The perception of this alone is enough to keep gold well supported for the foreseeable future. I’m short term bearish as this run up has been significant enough for the longs to take chips off the table, but longer term bullish on the metal.

Gold Apr ’19 Daily Chart

Gold Apr '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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