If the US Dollar Index breaks below 84.56, I believe that it may break even further. In my opinion, the relationships between the markets should be observed, but no longer relied upon in trading. Gold and the US Dollar Index may move in tandum. The Stock Market, I believe, may flunctuate more in sympathy with the US Government plans than the reality of the true analysis of the banking sector. The Gold Market may still maintain the rally based on the recent rise of the XAU (the Philadelphia Gold and Silver Sector Index) along with the SPDR Gold Trust and the ETF's. Gold is often used as a long-term inflation hedge. Many money managers are suggesting the addition of a small portion of their client's portfolios maintain a percentage of Gold or one of the related products. Whenever a market increases or decreases enormously in a short period of time, one must be prepared for the potential retracements, it is easy for a market to become overbought or oversold making the potential reversals imminant. Shanghai Futures Exchange Warehouse reported an increase in in Gold inventories this week. India has not been a major buyer of Gold this year that I recall. It appears that they may be purchasing the less expensive Silver for their jewelry trade. Please note also that our ETF's or Exchange Traded Funds actually hold in trust securities backed by the physical stocks of Gold. While I view the possibilities of retracements, I remain a long-term bull of the Gold Market.
Gold
The April Gold Contract has broken out of my $940.00 potential resistance. While, as stated above, I caution the bulls to expect retracements and I expect this market to climb to $999.00. While I feel it may penetrate the $999.00 level, I am aware that traders may feel it is best to book the profits than take the risk of a pullback at such a high level. Should the April Gold penetrate $896.30 on the downside, I would change my mindset to stand aside and wait for the sell-off to subside.
A short note on the Crude Oil: We are close to my expected $31.25 as written on my previous issues. We may find the turning point is near.
Traders that wish to enter on the long side of the Gold Market may wish to enter on a pullback to $912.90 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. 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. 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.
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
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.
