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CPM Group Trade Signal - September 24 2020

Commentaries & Views

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Time Stamp
Prices as of 9:45 a.m. EDT (14h45 GMT) 24 September 2020 $1,863.50 (Basis the December 2020 Comex Contract).

Direction: Buy

Target Price / Range: $1,910

Timeframe: 24-09-2020 to 07-10-2020

Gold prices have fallen roughly $110 in four trading days. This has been part of a broad market sell off that has pushed stocks, precious metals, and other asset prices sharply lower.

The sell-off reflects investor and financial market nervousness about a range of factors that are turning more hostile toward economic and political stability. Included in the list are the following.

  • Increases in infections and deaths related to the coronavirus in Europe, the United States, the United Kingdom, and elsewhere.
  • Some weaker economic indicators being released in the United States, Europe, and other countries and regions. 
  • The assumption that the U.S. Congress will not provide any further economic stimulus at least in the next several months.
  • U.S. election uncertainty amid indications of potential heightened political violence.
  • Other factors such as Brexit, increased U.S. economic, political, and military moves against China, and an array of other factors.

The market adage is: Do not try to catch a falling knife. Wait until it has hit the floor and bounced.

It is not clear how low gold and silver will fall, but CPM had projected that $1,850 might serve as a base for gold in the September – November period. Given that all of the factors that have led investors to increase their gold purchases remain in place, with some worsening, CPM expects prices to recover. A metal that can fall $110 in four days can rise back $110 in four days as well. Gold around $1,860 appears to be a good area to buy from both a short and long term basis. If prices hold around $1,850, it would be a good level for investors to buy.

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.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.