If the US Dollar Index breaks below 84.24, I believe that it may break even further. In my opinion, a stronger stock market normally would dictate a lower Gold market. It is my opinion the strength in the stock market could simply be an emotional reaction to the stimulus package and therefore be short lived. Crude Oil traded lower on Friday which could add to potential downward pressure on Gold futures. I believe the Crude market may have one more break coming shaking out the remaining longs and then begin to rally. Should the US Dollar Index and the Crude market become less influential we could see the Gold Market trade more independently in the future. The stimulus plan news is certainly welcome and inspiring, but the reality of launching the stimulus plan may take a tremendous amount of time before the benefits are a reality.
Gold
The April Gold Contract appears to be in a bull flag pennant formation that could lead to a continuation of the current move up. We could see a break out from the $914.50 to about $940.00. Should the market break $867.50 in my view the bull market is over. Traders that wish to enter on the long side of the market may wish to enter on a pullback to $910 with the knowledge that this market is extremely volatile and may spike down any time to take out any stops before it may continue higher. Healthy re-tracements may often provide more support to the market while allowing new entries. As stated, 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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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.
