CPM Group Trade Signal - March 12, 2021
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:53 a.m. EST (14h53 GMT) 12 March 2021 $1,702.30 (Basis the April 2021 Comex Contract).
Direction: Stand Aside
Target Price / Range: $1,675 - $1,735
Timeframe: 12-March-2021 to 19-March-2021
Gold clearly is range bound on a short-term basis. The range clearly is $1,675 - $1,735. The question for short-term investors limited to buying or selling spot or forward metal is whether you try to trade this range or stand aside and wait for a break out of this range.
Prices were at $1,700 Friday morning in New York as this was being written. Prices could drop to $1,680 in a moment, a day, or the coming week. The reality is that there is a lot of downward pressure on prices. Much of the pressure reflects rising U.S. Treasury interest rates, which are leading to some selling based on valuation models and to additional selling as some more fundamentally driven investors worry that higher interest rates will remove the incentive for holding some of your portfolio and wealth in gold.
Rising interest rates, coupled with better information on the U.S. vaccination program, passage of the $1.9 trillion American Relief Plan, relatively contained U.S. inflation data, and better economic statistics all are helping support the U.S. dollar, adding to downward bias against gold.
Given all of these factors, the impulse is to not jump in front of a train racing downhill in terms of gold prices.
However, the gold market is heavily oversold at this point. Prices could rise just as easily, as they did Thursday. Gold may be contained below $1,735, but a break above that could take gold to $1,760 in short order.
The volatility within the range over the first two weeks of March suggests continuing to stand aside.
This is exactly the kind of market in which CPM prefers options strategies. This is an ideal market for a straddle or strangle options trade.
Investors limited to buying or selling spot or forwards might go short at current prices, expecting to reverse and go long should prices test $1,675 - $1,680 again in the next couple of days.
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.