CPM Trade Signal - April 11, 2022
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:10 a.m. EDT 11 April 2022 $1,971.10 (Basis the June 2022 Comex Contract).
Initial Target Price / Range: $1,980 initially, then $2,000
Initial Timeframe: 11 April 2022 to 22 April 2022
Gold prices have remained high and volatile, fluctuating in line with the ebbs and flows of the tides of war in Ukraine.
Prices are expected to remain high and volatile, and CPM continues to recommend that short-term focused investors trade gold from the long side.
When gold was $1,948.20 on 24 March CPM issued a Gold Trade Recommendation with a target of $1,980 for the April futures contract. Since that time gold has traded sideways, mostly between $1,917 and $1,973. It opened today at $1,949.60 and has since moved as high at $1,974.60.
Various technical levels have been bereached which have helped gold prices move higher today and two major factors seem likely to keep gold in a slightly higher range this week and next.
1. The first is, Russia and Ukraine are gearing up for a major battle outside Kharkiv, and possibly a major battle on a second front in southeastern Ukraine. The Russian column now heading south toward Kharkiv may seek to skirt that city, seeking to occupy the land south of it while Russian forces in the Donbas region push north, seeking to consolidate power in a wider swatch of eastern Ukraine. Urkainian forces meanwhile are gearing up to meet Russian offensives on both fronts.
2. The other is inflation. The Bureau of Labor Statistics will release the March Consumer Price Index report on Tuesday, 12 April. This will be comparing March 2022 price levels to March 2021 levels, before inflation really began rising. The core CPI was around 1.6% in March 2021, while headline inflation, primarily reflecting rising oil prices, had begun rising from around 1.7% in February 2021 to 2.6%
Since tomorrow’s March 2022 CPI release will be comparing March 2022 to the still-low March 2021 figures, the percentage changes in price levels will be high, which will lead financial markets to renew their inflation concerns.
These two factors appear most likely to keep gold prices elevated in the next week or two. Additionally, any weakness and or increased volatility in the stock markets due to rising interest rates and the upcoming first quarter result season should provide additional support to gold prices.
Longer term, the twists and turns in the Ukrainian war are likely to whip gold prices up and down, with an upside orientation. Russian military actions are poised to turn more aggressive against civilian populations, and the potential for a broadening war remain as two scenarios that could push gold back to $2,000 or higher at some point in the weeks and months ahead.
One-Month Price Range: $1,780 - $2,200
As long as the Russian military continues to push through Ukraine, price volatitly will remain along with potential for a price spike.
Three-Month Price Range: $1,750 - $2,200
Gold would seem vulnerable to weakness given where prices are, but are currently supported by the Russian-Ukrainian conflict. A continued escalation in war and expansion could push prices sharply higher, but in the interim gold will remain volatile with an upward bias. It may be up to Vladamir Putin to be able to calm markets since he is the antagonist at this moment. Prices will likely subside sharply if this occurs.
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 email@example.com for details.
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.