If the US Dollar Index breaks through 86.90, I believe that it may find more support to climb higher to possibly 88.77. In my opinion, the weaker stock market has contributed to the move in the Gold Market. I believe Exchange Traded Funds in Gold have been a major factor in supporting the Gold Market. SPDR Gold Trust Holdings have shown increased participation. Gold has been raised in value 17% since October making it one of commodities brightest. The fourth largest producer of Gold, Gold Fields (GFIJ.J) is trading 6% higher raising it's potential output forecast. The banking sector has caused great concern. The investment community today is risk adverse with a need for transparency in their investment products, in my opinion. I believe that the attraction to Gold as a safe-haven investment is still intact.
Gold
Today, we are seeing a Gold rally that may lead to further participation. Traders that wish to enter on the long side of the market may wish to enter on a pullback to $850. After today's substantial move to $931.30 upon the writing of this report, it may pull back to fill in on Monday. Healthy retracements may often provide more support to the market while allowing new entries. Follow-through buying may take the Gold Market to $940. If $940 is penetrated, I am looking possibly for $1000. Given the volatility of the Gold Market, stops placed too close to entry levels will be vulnerable to election. To manage the risk without a stop loss, a trader may use a Call Option/Bull Call Spreads to limit their exposure. 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.
Please call or email me for the complete recommendation to coincide with your risk tolerance, so that we may apply the correct Money Management.
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Good trading!
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Futures' trading involves the substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources that New World Trading believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results. Any dollar amount quoted is exclusive of commissions and fees.
