RJO FuturesCast

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Metals

June Gold, Can We Just Pick a Direction?

Posted 03/29/2019 9:44AM CT | Joshua Graves

June gold has been unable to pick a direction ever since crossing the 1300 threshold. It appears that every time we make a run toward 1400 the gold bears take control and push the market back down toward the pivot point of 1300. There have been ample reasons to play both sides to this trade. The most important bullish factor we have seen recently is the extremely dovish fed which has essentially guaranteed a rate hike is not happening this year, and even a rate cut being put on the table. Another bullish factor which has yet to develop (and could start any day) would be a stock market correction. Even a little one at that. We’ve seen quite a run in U.S. equities over the past few months, and with companies such as Fedex giving pause to the health of the global economy in their recent earnings I think investors should be paying more attention to the precious metal.

The technicals of the gold market appear to show a classic head and shoulders pattern that did not develop until the recent $30 sell-off in the June futures. I would be looking for a short position in gold down to around 1250 before covering. Traders who are long from this level should be watching the 1285 level as a key area to exit the trade should they be wrong. Keep in mind the ATR or average true range in gold show that $13.50 is a typical day’s move in the precious metal currently. Options are a good play for traders who want calculated risk when futures are moving as much as they are. Look for a more pronounced move lower in the short term, but longer term this market could be range bound between 1250 and 1350.

Gold Jun ’19 Daily Chart

Gold Jun '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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