The Weekly Gold Digger
The December US Dollar hit a high of $77.28.5 and may trade higher, quite possibly to $79.26. We had experienced lackluster home sales and a weaker stock market, which made the US Dollar a bit more appealing to investors. Further support for the US Dollar came from US Secretary Treasury Official Timothy Geithner with his statements on Thursday. He spoke of the importance of the US Dollar in retaining a strong role globally to keep the United States Financial System upheld with the confidence of its citizens. While in theory a strong US Dollar may be appealing, our products become more attractive to the global marketplace when our US Dollar is weaker. I am of the opinion that this temporary strength may be short lived. Retracements are healthy and necessary for the marketplace. In this case, I still believe that in the long term, we shall see the US Dollar drift lower. Why am I elaborating on the US Dollar as a Gold Trader? The US Dollar and the Gold Market seem to be locked in a mirrored relationship at least for this time period. While the stronger US Dollar Index has pressured the Gold Market many other factors may support the Gold Market in the coming months. Asia has made statements that they wish to build their supplies of physical Gold even beckoning their people to purchase the metal. India typically requires the Gold for their Indian Wedding Season. With the US Federal Reserve tightening its emergency lending policies, the US Dollar has had a boost to push the December Gold Market the a recent low of $985.50. Other pressures came from the November Crude Oil contract touching a recent low of $65.05.
The Gold market has been a hedge against inflationary concerns for years. The relationship between Gold and the US Dollar continues its inverse course. While the US Dollar remains weighted against the six major currencies, Gold may be boosted by a variety of factors: It is purchased as a safe-haven by investors shifting from low interest bearing government bonds and other products that cannot keep up with the rate of inflation. The Gold may be traded in physical bullion, ETF's, XAU, Spider Gold Trust and futures contracts to name a few. Typically, in years past, the currency of a country could be backed by physical gold.
Gold
The December Gold contract has tumbled from the recent highs of $1025.80 to a low today of $985.50 today. Often traders will trail their stop losses to prevent losing any cumulative profits on positions held. By this, the selling volume may increase and give momentum to a temporary weakness in the market. The indicators used by many traders revert to bearish sentiment which will further push the markets lower. While I remain long-term bullish, the near-term support may be $960.00. Should the market breach the $940.00 level, the damage to the chart formation may give us a bear market longer term. While investors that normally do not adhere to risk are torn between making money in a low interest bearing market and the risk inherent in trading futures markets. ETF buying has dropped in recent holdings reports giving the lowest reading in 2 months.
For those of you following last weeks Trade Recommendations: Please call in for a personal consultation to cover those positions.
New Potential Trades and Trade Follow-up
Aggressive & conservative traders may stand aside until the market has retraced..
No new trades suggested in the weekly time frame.
Please call for finer tuned trades daily.
The CME Group announced that they are introducing Mini Gold Kilogram contracts to meet the increased interest of investors. The smaller contracts may allow investors to participate in the Gold Market with less margin.
Due to the fluctuations in this market, please consult with your broker, or call us to strategize a risk management plan in line with your personal risk tolerance. Traders that wish to participate in the Gold Futures Markets may look at the E-Mini Gold contracts which have a lower margin requirement than that of the larger Gold contract. Please look for current margins before entering this market and be sure to allow cash cushion for any adverse conditions. Please consult with your broker to calculate the risk, stop loss orders or option strategies before entering such a volatile market. Investors that wish to take a position in the Gold Futures market should devise a plan according to their goals, risk tolerance and the amount of money they are willing to risk in this sector. Like many other investments, the success of the trading plan must take into consideration the timing of the entries and exits.
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Please call or email me for the complete recommendation to coincide with your risk tolerance, so that we may apply the correct Money Management. The Weekly Gold Digger is a Free Weekly subscription to receive trading opportunities by email along with fundamental commentary and basic technical points of interest.
Take a close look and feel free to call in and talk to me in greater detail. It would be my pleasure. Good trading!
Call me at (877) 224-1952 or email me at lburton@danielstrading.com
Risk Disclosure
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or services.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
