RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Time for Gold to Break 1200?

Posted 11/09/2018 9:13AM CT | Joshua Graves

December gold has struggled to maintain any kind of follow through to the breakout of 1250 and above. If we look at gold from a technical perspective to start, it’s clear that it’s broken, and likely to retest 1200 and possible contract lows over the coming weeks. December gold spent the better portion of the last three months between 1180 and 1225. In my opinion, it’s likely that gold remains range bound for the coming weeks. If you look at the ADX it’s a very weak trending market, which leads one to believe that any move up or down is not likely to have much follow through.

Gold is currently trading sharply lower, down $14 on the session following the FOMC meeting that essentially stated that a continued hawkish stance and gradual rate hikes are necessary to keep up with the inflation goal. There are other key factors leading to gold’s decline. First and foremost, the U.S. dollar index continues to pummel emerging market currencies, and pressure gold from any follow through rally. Another key reason for the sell-off is the U.S. unemployment claims data that came out this week which showed a 45-year low in claims. This is obviously great news for the economy and a headwind for the safe haven commodity. There are a number of ways to engage gold in this range in which a trader can take a non-directional stance using options and futures, and even a combination of the two for a trade.

Gold Dec ’18 Daily Chart

Gold Dec '18 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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