Gold/Silver: How do Gold investors play the fading war trade?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
It is no secret that the October 9th gap higher on the charts fueled by geopolitical safe-haven inflows and the subsequent $150 rally were traders positioning for a widespread escalation in the Middle East. With the conflict remaining, I find it troubling for Gold technically, given the lack of upside momentum following this week's "dovish Fed pivot," where treasury yields broke critical support at 4.81%, and the U.S. Dollar fell to one-week lows. Friday's jobs number "miss" should have done the trick, with 150,000 jobs created (1/3 Government, not "real" jobs) versus the expected 180,000. Traders should be concerned and ask themselves, why is Gold unable to push to new contract highs?
Daily Gold Chart
Gold futures remain stuck between a rock and a hard place, with $2020 as your critical resistance point and $1983 (200 DMA) as your key support. The psychological $1950 remains below, and the 50 DMA is your "line in the sand" at $1944. Gold will need a close above $2020, with the following session stronger to extend the rally to $2050. My biggest fear for the Gold bulls is that recent speculators will rotate out of Precious Metals and back into U.S. Equities. Therefore, it is wise to purchase "put protection" or reduce positions back down to comfortable levels based on individual risk parameters. Having the flexibility to enter and exit the market quickly makes it essential for Precious Metals investors to have a futures trading account alongside their core Physical Precious Metals holdings. If you are interested in speculating on the rise and fall of the price of Precious Metals on a shorter-term basis, such as two weeks or two months, or If you have never traded futures or commodities, check out this new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.
Daily Silver Chart
Silver has lagged Gold's performance after failing to reach the 200 DMA at $23.86 and needs to close above $23.40 to capture upside momentum. Traders will want to focus on $22.50 as your "line in the sand" and also should question why it hasn't Silver broken out to the upside. Perhaps it's "manipulation," that's always an easy "scapegoat" when things aren't going as planned. To help you develop a technical trading strategy, we have recently updated our "5-Step Technical Analysis Guide," which will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: New 5-Step Technical Analysis Guide.