How will you capitalize when Gold is up $500 on a Sunday night? I am not looking for an answer; we futures traders think about it. Gold futures this week reached new all-time highs as anxiety surrounding an escalation between Israel and Iran (OPEC member) pushed the CRB index to its highest level since October as the raw materials basket entered the new bullish phase. Silver futures jumped to new contract highs, and Crude Oil futures reached their highest levels since last October. Historically, commodities have proven to be the best asset class to own just before the Fed cuts rates because supplies often remain limited while demand accelerates.
Friday morning's blockbuster payroll data (303k vs. 200k exp.) brings up another question I often ask: If we have strong jobs, consumer spending, and GDP growth, why does the Fed even need to cut rates? Fed officials pushed back on interest rate cut expectations to try and help boost the U.S. Dollar. Why would they do such a thing? A strong Dollar can help them regain control over inflation. It will also make exports look expensive and cheap imports look like bargains. The critical level to watch in the Dollar Index is 105, a close above that could temporarily halt the rise in precious metals.
Daily Gold Chart
Central Bank buying, ETF inflows, and geopolitical safe-haven buying all helped Gold futures surge this week. Futures continue to show resiliency with initial support at $2255, followed by $2005. Your "line in the sand" is pocket support at $2170-65, where any close below this level should spark further liquidation. When trading a commodity at or near all-time highs, it is important to come up with a plan and trade that plan. 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.
