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Metals

October Gold Whipsaws, New Target is $1500

Posted 08/02/2019 1:43PM CT | Joshua Graves

Volatility is a beautiful thing! When the gold bears looked to gain the edge yesterday with a slumping chart pattern, a strong stock market, and general positive economic sentiment a breakdown below $1400 looked likely. October gold futures have held $1400 for most of July with a few retests of the key level. In my last write up on gold I had mentioned this would be key for anyone bullish the gold, holding $1400. It appears that an escalation of the trade war was the all the spark that was needed to get bulls excited and gold had a major reversal from $27 down to $14 up. A $40 swing in the span of a few minutes! The US economic data and overall positive sentiment in the market has been a headwind for gold bulls and with the new China tariffs on essentially all remaining Chinese imports it is clear (if it wasn’t before!) that this trade war is here to stay. It’s likely to remain for the rest of 2019 as both sides can’t even do baby steps for stepping down this tit for tat trade war.

Yesterday’s move does not mean buy with both hands, it simply builds the bull case for gold over the next few months, as rate cuts seem more apparent and safe haven buying comes into the picture stronger than ever. A key level to watch here is a breakout above the July 19th high of 1460.30. A move above this level would signal to me that a run to $1500 is likely. If you needed any more reason to be confident yesterday’s move was for real, October gold traded over 600,000 contracts yesterday with an average daily volume of 402,000. Confidence is what I saw yesterday!

Gold Oct ’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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