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CPM Group Trade Signal - May 17, 2021

Commentaries & Views

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Time Stamp
Prices as of 10:22 a.m. EDT (15h22 GMT) 17 May 2021 $1,844.60 (Basis the June 2021 Comex Contract).

Direction: Buy

Target Price / Range: $1,860

Indicative Initial Timeframe: 17 May 2021 to 28 May 2021


Gold reached CPM's 7 May $1,850 objective today, 17 May, touching $1,855.80 in early trading.

Prices have been buoyed by inflation expectations and concerns of higher inflation, along with some softening of U.S. Treasury interest rates following strong upward moves earlier in the year, and a weaker U.S. dollar. CPM views the higher inflation indicators as temporary or transitory, in line with the views expressed by the Fed, the Treasury, and most mainstream economist. That said, some investors will continue to buy gold in fear of higher permanent inflation. Our longer term research discusses why we do not hold this view in detail.

While the upward move may be done in the short term, prices could rise a bit higher. As a result we are maintaining a posture suggesting short-term investors continue to hold long positions. We might be a short-term buyer with a view that gold could rise another $15 from current levels to $1,860 before profit-taking, a reflex away from the inflation-fear-driven long position taking, and seasonal factors lead to prices declining. CPM still expects weaker prices in the June – August period.

The market may be over-reacting to the stronger inflation numbers, but it may take a while before the downward reaction, which may take a few months to unfold.

Our posture thus is to hold existing long positions and to buy with an $1,860 short-term target, with one foot toward the door. CPM's strategy at this time would be hold long positions gold and buy some August puts.

Operational Notes:


1. CPM strives to try to make these Trade Recommendations as close to its own preferred trading strategies as possible. CPM's preferred investment strategies use physical, futures, forwards, and options.
2. If CPM issues a Recommendation pointing to higher or lower prices over a given period of time and does not issue a subsequent new Recommendation during or after that time period, it should be taken to indicate that CPM is maintaining the buy, sell, or stand aside posture in the most recent Trade Recommendation.
3. Accordingly, we have modified the "Timeframe" to "Indicative Initial Timeframe."


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.

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.