June gold futures have seen a breakout below the key level that most traders were watching at 1285. This was a level that gold bounced off of three separate occasions going back to mid-January this year before rallying up above 1300. With the move beneath this 1285 level (Christmas was the last time we were there) we can assume that that those old lows between 1285 and 1290 are now the point where gold should have trouble getting above. I am looking for gold to make a move down to about 1260 before the move lower is completed. This would represent a 62% correction between the contract low and high.

Interestingly, we are currently tracking gold up $9 off the 50% retracement level and on news of a blowout U.S. GDP number of 3.2%. If you look at the fundamentals that are driving gold lower it’s quite clear a very strong U.S. dollar, strong U.S. equities (with great earnings numbers so far), and a market environment that is taking a very “risk on” attitude that are driving golds trade lower. Investors right now are looking at the environment and clearly the trend in the stock market points toward higher prices, a bearish theme for gold as it’s seen as a safe haven asset. There are no current geopolitical tensions in the world other than Iran threatening to close the Strait of Hormuz which they’ve repeated in the past as a bluff. The main catalyst I can see right now to drive gold higher is a sell-off in U.S. equities driven by a potential “no deal” situation with China. Should this happen you would likely see a rally in gold well above $1300. If you’d like to know how to play gold given its current trading range contact me directly.

Gold Jun ’19 Daily Chart

Gold Jun '19 Daily Chart

Joshua Graves

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.