The gold trade has seen quite the selloff over the last seven days. Right now, the main driver of this is a resilient US dollar and a growing chance of four rate hikes in 2018. Despite the recent, sharp selloffs over the past few months, the US stock market seems to have started the climb back toward the highs and investors have shrugged off the possibility of more volatility. This would inherently reduce the demand for a safe haven asset like gold.

The technicals spell disaster for June gold, clearly. Not only has the trade broken the psychologically and fundamentally important level of 1300, but there is not much for support until the recent contract low back in mid-December of 1247. Look for a dead cat bounce as we approach this low for a good entry point. We are also trading below all moving averages, with the most important level being the 200-day moving average. A Fibonacci retracement on this from the contract low to the high showed the 62% retracement of 1300, which is another broken support level. Until gold has new bullish news to trade off of, look at the market perception and the momentum as the biggest reasons to drive gold down. The last leg of support that I see for June gold comes in from a long-term trendline support going back to July 10 of 2017 at around 1273. If we take out this long-term upward trendline, look for a quick retest of the 1250 area.

Gold Jun ’18 Daily Chart

Gold Jun '18 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.