CPM Trade Signal - October 31, 2023
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Featuring views and opinions written by market professionals, not staff journalists.
Prices as of 9:20 a.m. EST 31 October 2023 $2,009.60 (Basis the December 2023 Comex contract).
Recommendation: Sell, Stay short
Initial Target Price / Range: $1,980
Initial Timeframe: 31 October 2023 to 10 November 2023
CPM’s more recent short term gold trade recommendation was wrong. On 17 October when gold was trading at $1,937.90 we issued a sell recommendation, suggesting that gold could decline to around $1,900 over the last two weeks of October as world concerns over the Israeli-Hamas war might be reduced, which might combine with a settlement of the U.S. auto workers strike, strong economic performance, and stronger U.S. Treasury markets to reduce investor demand for short-term gold.
That has not happened. Instead gold prices have risen more than $70 over the past weeks.
Economic conditions in fact have been stronger. Inflation rates (CPI and PCE) have continued to decline, interest rates remain high. All of these factors would suggest reduced stimuli for investors buying gold, driving the price lower.
The major stimulus for the higher gold prices appears to be the Israeli-Hamas war. However, after rising following Hamas’ attack on Israel oil prices have subsided back to around $83 for WTI and $87 for Brent crude, the levels they had fallen to prior to the 7 October attack. This certainly suggests that the oil industry does not expect the Israeli-Hamas war to widen into a regional battle that would negatively affect global economic conditions, even if much of the political world has focused on such concerns.
Most of the reasons for higher prices appear to be priced in at this time. That does not mean prices necessarily will fall, but they may not rise much further unless some new news emerges. The Washington debt ceiling melodrama might provide such a round of bad news, but financial markets seem to have been inoculated against U.S. (and other) politicians playing with public sentiment, ‘fixing’ things they have created at the last minute.
Putting all of this together, gold may be over-bought on a short-term basis and vulnerable to a pull back. CPM is suggesting short-term speculatively oriented investors remain short.
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 firstname.lastname@example.org 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