CPM Gold Trade Recommendation
Time Stamp
Prices as of 2:00 p.m. EDT 19 September 2024 $2,616.30 (Basis the December 2024 Comex contract).
Recommendation: Stand Aside
Initial Target Price / Range: $2,560 - $2,640
Initial Timeframe: 19 September 2024 to 3 October 2024
Gold prices rose strongly during the second half of last week, following increased expectations of a 50 basis points (bps) cut in the short-term Fed Funds interest rate by the Federal Reserve. The Fed delivered this 50-bps cut yesterday, 18 September, and lowered (compared to its June projections) its median forecast for interest rates going forward as well as its expectations of future economic growth and inflation. The Fed also raised its projections for unemployment. All of this together suggests that the Fed is concerned about future economic growth, but with its 50 bps cut and its lowered interest rate projections was attempting to show the market that it is ready to act aggressively if needed.
This has mixed implications for gold. On the one hand, projections of lower interest rates are supportive of higher gold prices at the same time the lower interest rate environment could reduce the possibility of significantly weaker economic conditions and thereby higher gold prices. This is not to say gold prices will weaken, but that gold prices may face challenges rising strongly from present levels in the absence of weaker economic data. This coupled with ongoing political risk should create a volatile environment for gold prices in the coming weeks.
One-Month Price Range: $2,320 - $2,650
Volatility is expected to continue.
Three-Month Price Range: $2,350 - $2,700
Market concerns about numerous political and economic risks that could precipitate an economic downturn are expected to be supportive of gold prices.
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 info@cpmgroup.com for details.
Notes:
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.
