If the US Dollar Index has a break-out above $90.30, I will remain a bull in this market. I believe we are in a temporary short-term retracement at this time. In my opinion, the relationships between the markets should be observed, but no longer relied upon in trading.
Friday, we have seen that inverse relationship between the Gold Market trading to a high of $945.50 and the US Dollar trading to a low of $88.50. The Gold Market has some less than perfect fundamentals especially with India still showing weak demand. The safe-haven appeal of the Gold Market is shared by paper assets such as the US T-Bonds and the US Dollar. Foreign Investors may allocate portions of their portfolios to each segment of metals and paper assets. Shanghai Futures Exchange had reported warehouse Gold inventories remain at 6 kg. The Exhange Traded Funds (SPDR Gold Trust) have also remained at over 1.000 Total Tonnes. Countries typically will wait for more attractive prices before accumulating their reserves. Gold Bullion and Coin sales gain volume as they are regarded as safety-haven products. "Buyer beware"; it is vital to know the product, cost and safeguards prior to investing in any product. Many can be non-regulated. Exchange traded products typically have safeguards furnished by the exchange. We are in an age of "scams". Transparency is not a luxury but a necessity. Please research the investment prior to investing.
Gold
The April Gold Contract has taken off Friday with a high unemployment report. While my indicators remain short-term bearish, I personally feel that this market may take off again. Monday is a day that can be extremely volatile. I would look at possible support at $874.00 while if it stays above $900.00, there may be another move up to and through $1000.00.
A short note on the Crude Oil: I still expect $31.25 as written on my previous issues, but it may be $33.85 to shake out the longs and form more solid support. The Short-term trend is clearly up for the moment and may range trade between $39.44-$45.88 in the May Crude Oil. It is my opinion that the demand may not allow this market to really take off. The Jatropha Biofuel may be used on a commercial scale going into 2011.
Traders that wish to enter on the long side of the Gold Market may wish to enter on a pullback to $874.00. I still remain the Long-term bull to $1030.00.
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.
