I had previously predicted the gold market to correct and to date the market is cooperating trading lower by approximately $55/ounce in the last 2 weeks. Perhaps a bigger development is a trade under that psychological $1700 level and as one can see on the chart above we are probing the 100 day MA; identified by the red line. Also February futures may be breaching a trend line that has held since midsummer.
There is plenty of Central Bank activity as the RBA cut rates to 3.0% today while the BoC left rates alone at 1.0%. Still on the docket this week we have an ECB meeting and the BoE not to mention a jobs number to round out the week. Why I bring this up is any surprise could cause increased volatility. My stance remains the same more depreciation in metals as my target in gold remains a trade under $1670 and as for silver a trade closer to $31/ounce. The 100 day MA in March comes in at $31.68.
My favored play in both metals is back ratio spreads. Those braver than I could have short futures positions but I would hedge them off with the purchase of call options or the sale of put options. Once we get the anticipated washout if it plays out I am eager to be a buyer for clients from lower levels…stay tuned.
Traders out there should contact me to get a game plan on the next long entry as I view it as an exceptional longer term swing trade opportunity.
To discuss in more detail this chart or any other you can reach me at:
mbradbard@rcmam.com or 954-929-9997
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