From our vantage point there is a lot of room for August gold to run to the downside, especially if the market is able to close below $1240. In addition to the chart looking ominous and that gold was unable to catch any semblance of a bid in the face of extreme U.S. Dollar weakness this week, the near term bullish prospects are grim at best. The major concern to the bear case at the moment, from our perspective, is how shaky the stock markets appear, and in increasingly frequent spurts. I don’t necessarily buy into the “flight to quality” narrative, but it doesn’t matter what I buy into. History shows that only a fool underestimates the “pied piper” quality narratives such as these can carry in the precious metals markets.
Chart from Investing.com
Gold volatility is currently at such low levels that establishing a short position via long August puts is a resourceful way to get exposure to the futures market leverage with minimal risk. The risk/reward ratios present tremendous opportunity in a market which can be explosive by nature. With an apparent double top in the rearview mirror we are looking for a minimum selloff to the old May lows in the $1215 area. Only a close back above $1280 changes our bearish tune. Even a close back above $1260 probably pours cold water on the near term bear case. As always fencing in trade risk before establishing a position is the only meaningful priority.
My many years of trading futures markets does make a difference. Feel free to call or email me if you have any questions or would like to open an account.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
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This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.