CPM Trade Signal - Jan. 7, 2022
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:29 a.m. EDT 7 January 2022 $1,792.30 (Basis the February 2022 Comex Contract).
Initial Target Price / Range: $1,800
Initial Timeframe: 10 January 2022 to 21 January 2022
Gold prices have continued in their sideways channel that has held since mid-November. Since 15 December prices have moved from the low end to the high end of that range, only to erase the entire upward up on 6 January in response to the Fed’s FOMC meeting minutes.
CPM has held “Stand Aside” short-term gold Trade Recommendations since 23 November. Prices have largely stayed within the project range. There is demonstrable positive attitudes emerging toward gold on the market of investors, however. This, plus moving into the period of greatest seasonal gold price strength suggest that yesterday and today’s lows are a good short-term buying opportunity.
Initially prices may move to $1,800, with $1,815 also likely over the next several weeks.
Interest rates are rising. Oil is rising, partly based on OPEC announcements and partly reflecting stronger markets. The spread between Brent and WTI remains narrow, suggesting that the upward pressure still is focused on the North American market as opposed to Europe. Stocks are mixed at high, near-record levels for the S&P500 (although down to mid-December peaks). the DJIA actually set a record high Wednesday before declining somewhat.
Interest rate increases have one of two effects on gold and silver prices, and other assets. The reaction depends not on the increase of rates but on the financial market’s overall perception of what the rate hikes mean. If markets see the Fed’s raising interest rates as being likely to effectively neutralize inflationary pressures, gold and silver prices will fall on the expectation that inflation will be brought under control.
If markets believe the Fed is acting too late and will not be able to tame inflation, gold and silver prices rise.
The markets clearly have more faith in the Fed’s ability to rein in inflationary pressures than in the permabull concept of hyperinflation and soaring gold prices.
Initial Target Prices and Timeframes are just that: Initial. If CPM does not issue a new Recommendation during or after that time it indicates that CPM is maintain the posture in the most recent Trade Recommendation.
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.
CPM’s preferred investment strategies use physical, futures, forwards, and options.
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.