RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Red Flags for Gold Bulls

Posted 05/10/2019 9:33AM CT | Joshua Graves

June gold futures have had a lot of reasons to rally recently, yet when we look at the price action, the opposite is happening. Let’s look at some of the big reasons. Front and center is the trade war and its ripple effects across the world. Gold futures failed to take out any key overhead levels once the news first broke early in the week, and even after it’s confirmation this morning with the tariffs now in effect we see gold up marginally around 1288. The second reason that might be more minor in nature is the news Iran is looking to ramp up nuclear production, and potentially violate the international deal to abandon its nuclear weapons program. Threats made against American forces with the U.S. response of sending a carrier strike group wasn’t enough to push gold higher either.

We have had good economic data as well as central banks buying in much heavier over the past week given the uncertainty surrounding the trade war as a reason some might not have heard about.  Another reason to be skeptical of an upside breakout in gold is the U.S. dollar index breaking to the downside even as I write. Usually gold and the U.S. dollar index move in opposite directions. Gold has seen no follow through even after all this bullish news. Technically we have not broken the continued down trend that gold has seen since the peak in early February. The downside in gold must be played unless a reversal above 1300, with sustained volume as a confirmation of the buying.

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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