Precious Metals Taking a BreakPosted 11/08/2019 9:24AM CT |
December gold futures have had quite the slide over the past few days, and it’s all attributed to a stock market rally on a possible phase 1 China trade deal, and a technical breakdown against key support levels. Investors are now taking a more risk on attitude as the market sentiment is that nothing can derail this rally. The possibility of at least the first step in the trade talks looks good, but nothing has been said from Trump confirming this. The precious metals market is reacting to any piece of news on trade talk progress on a daily basis, and I think overreacting in the most recent selloff. December gold is likely to head lower at least in the short term, down to $1425. This is assuming that nothing comes out to negate the progress the U.S. and China have made in recent days. It seems that a simple tweet is enough to throw a wrench in any trading strategy, but we must look at what we know today. I think traders should be looking at trading gold from a technical perspective and keeping in mind the noise that could derail the strategy and be ready to react accordingly. Traders looking at trading gold but don’t want to fully step in should look at the smaller gold futures contracts from 33 and 50 oz contracts. Building an outright long position in gold right now isn’t suggested, but as soon as the trade talks are fully confirmed “in jeopardy” and at risk of going south trade the trend.