Contributed Commentaries
CPM Group Trade Signal - January 20, 2021
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
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Time Stamp
Prices as of 1:30 p.m. EDT Settlement time (18h30 GMT) 20 January 2021 $1,866.50 (Basis the February 2021 Comex Contract).
Direction: Sell
Target Price / Range: $1,840 initially
Timeframe: 21-01-2021 to 29-01-2021
Gold prices rose on 20 January. They had been consolidating largely between $1,820 and $1,865 after their $145 drop over three trading days, from a high of $1,962.50 on 6 January to $1,817.10 intraday on 11 January. Prices rose as high as $1,870.40 on 20 January, settling at $1,866.50 (February Comex).
That sort of price consolidation suggests that prices are preparing for a major move higher or lower. While there are some pressures for higher prices, a drop appears more likely.
Short term CPM would look for prices to drop back to $1,840, and then $1,800, and then $1,780. There also is the potential for a sharper spike, similar to the $145 drop after 6 January. Such a sell off would have an object or support level around $1,720 or $1,700.
It appears that financial markets, including gold, now may see a Reduction in Risk with the change of administration in Washington. There are expectations that the new U.S. government will be more forceful in providing the financial stimuli needed to assure a recovery stronger and sooner than might have been expected previously. It also is expected to make renewed efforts for an internationally coordinated effort to combat the pandemic and the economic recession and financial problems created by the government responses to the pandemic.
These impetuses, if they emerge, would be good for the dollar, the oil market, and the stock market.
Short term they may not be so good for gold and silver, but also not so bad. Longer term they are good for gold and silver, so prices are likely to move sideways to somewhat higher as longer term investors continue to build inventories of these metals, keeping prices from falling too sharply, along the lines of what CPM has been projecting for years.
Note: Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target. Recommendations are valid until the target date or a new Trade Recommendation or message is issued by CPM.
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.
