CPM Trade Signal - May 12, 2023
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CPM Gold Trade Recommendation
Prices as of 11:03 a.m. EST 12 May 2023 $2,017.40 (Basis the June 2023 Comex contract).
Recommendation: Stand Aside
Initial Target Price / Range: $1,980 - $2,065
Initial Timeframe: 12 May 2023 to 26 May 2023
Since CPM issued a Sell Recommendation on 5 May gold prices have moved between $2,005.70 and $2,061.30, a $55.60 band. Gold price volatility appears to have picked up as the market tries to digest all of the mixed financial, economic, and political data and signals. Prices should be expected to swing in either direction until the U.S. debt ceiling fiasco is resolved.
As has been over the past several weeks there is scope for prices to pop higher once more. This could be on increased political tensions related to Russia’s invasion of Ukraine or a deterioration of U.S. debt ceiling talks, or perhaps another unexpected factor. Prices could pop back to $1,265 or higher on such developments.
There also is scope for prices to move sharply lower. Inversely to a deterioration of U.S. debt ceiling talks, there could be a resolution to these issues. Democrats and some Republicans are aware that prolonging the impasse already is harming the stature and reputation of the U.S. government’s creditworthiness. A resolution could see gold profit taking. There are other actions that could quickly deflate gold prices.
For one, the Democratic Administration could do what it did in the middle of the 1990s when Republican Congressional intransigence shut down the U.S. government. Then secretary of the Treasury Robert Rubin responded to a question in a press conference that there were several steps the Administration could do to fund the government, including selling some of the Treasury’s 261 million ounces of gold. Western gold mining donors convinced their Republican representatives to agree to the White House’s funding plans within a couple of days. The White House or Treasury could suggest such again, or even move to sell gold. That obviously would push gold prices sharply lower very fast. The Administration could invoke the 14th Amendment and ignore the debt ceiling.
In other words, gold prices could swing sharply in either direction over the next few weeks.
Seasonality also could weigh on prices, but an offsetting supporting factor could be the the roll of the June Comex contract to the August Comex contract. Prices could move in a similar or wider band than we have seen over the past couple of weeks during the remainder of May.
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 maintains the posture in the most recent Trade Recommendation.
Position may be closed out once target price is reached, within the noted discretion or until CPM provides new trade recommendation. CPM may have reported to have closed out of prior trade recommendation at its discretion before publicly publishing new trade recommendation due to processing time.
Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target.
CPM’s preferred investment strategies use physical, futures, forwards, and options.
CPM Group wants to thank the following companies for helping us make these short Trade Signals available free of charge, and for their commitment to providing good information in opaque and asymmetrical commodities markets.
Stillwater Critical Minerals
Granite Creek Copper