CPM Group Trade Signal - July 27 2020
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:27 a.m. EDT (14h27 GMT) 27 July 2020 $1,931.00 (Basis the August 2020 Comex Contract).
Direction: Stand Aside
Target Price / Range: $1,900 - $1,960
Timeframe: 27-07-2020 to 31-07-2020
This is a 'qualified' Stand Aside recommendation. Gold prices have risen from less than $1,800 10 days ago to as high as $1,941.90 this morning. All of the factors that have driven prices sharply higher remain in place, with some having increased in intensity. The dollar has been falling sharply, in part as investors look at the worsening coronavirus pandemic within the United States, which has prompted a large group of public health care professionals to urge shutting down the U.S. economy again. The U.S. government meanwhile begins a more public round of demonstrating its inability to deal with the Covid-19 pandemic and the economic chaos that has ensued, which will keep the dollar on the back of its heels for a while now.
The stock market is up, as investors park money there with no interest in actually investing in productive assets and few other alternatives. Some of the viable alternatives have been precious metals, which have risen sharply as a result.
One of factors pushing gold prices higher is the need to roll another 22.7 million ounces out of the August Comex gold futures contract, first delivery date for which is this coming Friday, 31 July. This may continue to push spot Comex gold prices higher, for the next five days or so.
The adage is “Do not stand in front of a runaway train.” Accordingly, it would not seem wise for short-term investors to sell today. They should stand ready to sell by Friday or Monday, depending on where the market and broader economic conditions are, and how the August Comex roll is progressing.
Short term investors may be tempted to buy for this week, but the buying should have been done already. Buying around today's lows of $1,899 - $1,920 might make sense. Buying above that may seem unwise and overly risky.
Note: Discretion should be allowed at +/- $2.00 from the target.
Disclaimer – Past performance is no indication or guarantee of anticipated future profits, and neither Kitco Metals Inc. nor CPM Group can accept any liability or responsibility for any loss suffered as a result of gold price fluctuations. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000. Therefore this trade recommendation does not give rise to rights to claim compensation under the Financial Services Compensation Scheme. CPM Group is a registered CTA with the U.S. NFA and CFTC. At times the principals and associates of CPM Group may have positions in the precious metals, commodity, and equities markets. CPM Group also manages investment and industrial positions in markets for its clients.