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CPM Trade Signal - Feb. 14, 2022

Commentaries & Views

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Time Stamp
Prices as of 9:22 a.m. EDT 14 February 2022 $1,864.30 (Basis the April 2022 Comex Contract).

Recommendation: Stand Aside

Initial Target Price / Range: $1,845 - $1,868

Initial Timeframe: 14 February 2022 to 21 February 2022


Gold prices have fallen to $1,851.90, 0.37% above the $1,845 printed target on CPM’s sell signal last Friday, when gold was at $1,863.70, 60 cents below current prices as this is written. That Trade Recommendation cited initial support at $1,850.

After gold dropped to $1,851 this morning it moved back up to $1,864.60. Current price trends will depend on developments with the Russian belligerence toward Ukraine. The uncertainties and potential for an invasion may clarify in the next 48 hours, but they seem more likely to continue beyond Wednesday, extending the uncertainty reflected in gold prices and other financial assets.

As part of it psychological operations of informing the world of what it picks up from within the Russian government and military leadership to box Russia in to some extent, U.S. intelligence reported that the Russian military was ordered Friday to be ready to invade Ukraine by Wednesday, 16 February. The Russian government, fully aware that anything it says privately may be used by the U.S. against it, may well have put that message into its system in order to trigger the U.S. information release, allowing Russia to repeat that the U.S. is trying to whip up global ‘hysteria.’ Such psychological operations may continue on both sides beyond Wednesday. No one really knows, including the leadership of both Russia and the United States.

Given this uncertainty, CPM would recommend short-term gold investors stand aside from long or short positions.

  • If prices fall below $1,845 that may well be a sell signal with a downside target around $1,820. It also could be a buy sign.

  • On the high side, if prices break above $1,868 that could be a buy signal with a target around $1,873. Or it could be a sell signal, as $1,863 was last Friday. (Sellers who sold at $1,863 Friday and bought back at $1,851 today would have made a quick $12, or 0.64% before spreads and fees.)

  • Much will depend on Russian miliary actions on the Ukraine border.

  • CPM will recommend standing aside until there is some increased clarity. Should prices breach either of the support and resistance levels above, CPM probably will issue a new Trade Recommendation, even if it is to continue standing aside.

One-Month Price Range: $1,788 - $1,875

Gold prices have upward momentum and seasonal strength at present, but they remain vulnerable over the course of February. A spike to test $1,788 - $1,790 cannot be ruled out. Stronger investment demand, inflation and financial concerns, and technical factors meanwhile could push gold toward $1,870. A Russian invasion of Ukraine might exert some upward pressure on gold, but perhaps less than many market observers would predict.

Three-Month Price Range: $1,750 - $1,880

Gold would seem more vulnerable to further weakness in March and April. Investors are expected to become less concerned about economic weakness as expansions continue even in the face of higher nominal interest rates.

CPM has one-month, three-month ranges and eight-quarter quarterly price projections with greater discussion of the factors behind CPM’s analyses provided in CPM’s monthly subscription service, the Precious Metals Advisory.

While short-term trade recommendations provide high risk – high reward opportunities for investors, it is difficult to capture the complex web of factors affecting precious metals prices and the nuanced CPM analyses of these factors that goes into our firm’s price projections. In addition to these short-term outlooks, CPM Group provides clients enhanced trade recommendations that include one and three month price projections, as part of our Retail Investor Program. Contact CPM at info@cpmgroup.com for details.

Notes:

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.

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.